Due to an outstanding debt of more than N250 billion, Nigerian telecom providers are requesting regulatory authority from the Nigerian Communications Commission to remove Unstructured Supplementary Service Data (USSD) services from banks.
No long-term solution has been found despite previous involvement by the Central Bank of Nigeria, led by Godwin Emefiele, and former Communications Minister Isa Pantami. This debt has been a controversial topic for the past six years. Because it doesn’t require an internet connection, the USSD service, which was first created by telecom firms to offer airtime and subscription services, has been widely used in the banking industry.
In the past six years, banks have been making money off of USSD services without meeting their payment requirements, according to Gbenga Adebayo, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON).
He went on to say: “Under normal circumstances, this would be a straightforward commercial transaction, but it has gained political interest. If it were simply business as usual, there are clauses in the contract that would allow each party to prepare themselves.
“Both parties would have been able to invoke those clauses. However, due to the political interest that has developed over the years, it has now become necessary for operators to seek regulatory clearance before taking any action,” Adebayo added.
He stated that the outstanding debt needs to be addressed and that the USSD issue has been a longstanding worry, adding: “The reality now is that this money has to be paid. We’ve delayed it for too long, and there have been too many discussions and questions surrounding it. What’s not right is not right. There’s no other name for it. The profile of this debt has risen and lingered for too long.”
The NCC permitted telcos to stop banks from utilizing USSDs in May 2023. According to Adebayo, the debt, which was N80 billion in November 2022, increased to over N120 billion by April 2023 and is currently over N250 billion.
Some bank executives, including Segun Agbaje, the Group CEO of Guaranty Trust Holding Company, and Herbert Wigwe, the late CEO of Access Holdings, have questioned how the telecom operators arrived at the debt amount in light of this growing debt.
The ALTON head explained that the amount owing is the primary issue of argument, even if the banks do not contest their debt.
According to him: “We have records and information indicating that traffic remains the same, but they have not paid for it. They aren’t disputing that they owe money; what’s being disputed is the amount. They aren’t denying the debt itself.
“A debtor is a debtor, regardless of the amount. Whether you owe a small or large sum, if you’re in debt to a bank, they will act against you without regard for the size of the debt,” he added.
He further emphasized the absurdity of the situation, claiming that the banks would have already taken action, including hiring debt recovery agents to deal with the debtor operators, if this debt were owed to them.
Brandspur telecom and information news reports that banking operations may be significantly disrupted by the possible termination of USSD services, which raises questions about the ramifications for the banking and telecom industries.
Ejike Onyeaso, the Director of the telecom consulting firm, Adaba Consult, stated that the main source of the problem is the leased lines that banks are given and how they are used. He clarified that although telecom providers have been providing these lines, the banks have not fairly reimbursed them for their labour.
According to Onyeaso: “Telecom companies are saying that since the banks are using these services to generate additional revenue—specifically through USSD—it only makes sense that they pay us for the services rendered.
“The staggering amounts involved necessitate the sustainability of the telecommunications industry,” he added.
Continuing, he has this to say: “At the same time, it’s vital for the banking sector to avoid any form of collapse. If telecommunications operators follow through on their threats, certain banking services would be impacted during any suspension.”
Onyeaso stressed that a settlement was necessary and asked both parties to get back to the bargaining table. Even though the banks may view the situation differently, he said that they cannot dispute that the services are being rendered.
He stated: “If they believe these services are not necessary, they should allow us to withdraw them from our platform. It’s that straightforward.”
He concluded his statement by saying: “A laborer deserves their wages; they need to pay us for the service provided.”
Karl Toriola, the CEO of MTN, said on Monday that he was certain the newly appointed governor of the Central Bank of Nigeria, Yemi Cardoso, and Dr. Aminu Maida, the Executive Vice Chairman of the Nigerian Communications Commission, would quickly resolve the current conflict.
