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Telcos Get NCC’s Approval to Disconnect Banks over N120BN USSD Debt




Telecommunications companies in Nigeria said they have received approval from the Nigerian Communications Commission (NCC) to disconnect Deposit Money Banks (DMBs) from using Unstructured Supplementary Service Data (USSD) on their various networks.

The Association of Licensed Telecommunications Operators of Nigeria (ALTON), the umbrella body for the concerned mobile network operators (MNOs), explained in a statement on Friday that the disconnection was triggered by failure of the banks to pay the debt accruing from using the USSD services provided to them by the telcos which now amounts to over N120 Billion.

BUSINESS METRICS observes that the controversial USSD debt has increased by N78 billion or 185.7% in the last two years surging significantly from N42 billion reported as of March, 2021.

ALTON stated in the statement co-signed by Gbenga Adebayo, its National Chairman and Gbolahan Awonuga, Head of Operations, that the approval was granted despite earlier multiparty stakeholder efforts to resolve the situation and prevent any impact on services.

Recall that ealier, Minister of Communication and Digital Economy, Prof. Isa Pantami had led efforts to resolve the controversy between banks and telecos, alongside other key regulators such as the Nigerian Communications Commission (NCC), the Central Bank of Nigeria (CBN), with full participations by MNOs and DMBs.

ALTON alleged that the DMBs have continued to incur greater and greater debt, without making the commensurate payments.

“Every time some progress is made, the DMBs come up with reasons to take stakeholders several steps back, in this matter,” According to ALTON.

The backstory

It will be recalled that MNOs and DMBs have had protracted disagreements concerning the appropriate USSD pricing model for financial transactions, transparency of charges, mode of collection and liability for payment of the outstanding and continuous service fees due to the MNOs (which currently stands at over N120 Billion).

Due to the inability of MNOs and DMBs to reach an agreement on the issues, MNOs in 2021 sought to disconnect DMBs due to the unpaid debts which stood at N42 Billion as at that time.

However, Minister Pantami intervened and asked the MNOs not to disconnect DMBs as the action would negatively impact on the Digital and Financial Inclusion policy of the Federal Government.

As such, the NCC, ALTON, Association of Telecommunications Companies of Nigeria (ATCON) and DMBs, represented by the Chairman, Body of Bank CEOs subsequently met on 15 March 2021 to discuss indebtedness of DMBs to MNOs for USSD services.

Further to the meeting, CBN and NCC issued a joint press statement on the agreement reached by all stakeholders which spelled out the resolution of the meeting, and the tension was doused.

Since then, according to ALTON, the Honourable Minister of Communications and Digital Economy and the Nigerian Communications Commission (NCC) had made several efforts to get the banks to show good faith and sign an agreement, in the national interest, based on the resolutions reached at that meeting.

The telcos said that unfortunately, the patriotic intervention of the Minister and the NCC have been taken for granted by the DMBs, as two years after, the banks have failed to sign sign a final agreement.

Frustrated MNOs go tough

The statement further read: “It is pertinent to note that the contract between MNOs and DMBs on the use of USSDs for banking transactions is strictly commercial and MNOs are at liberty to withdraw the services if it is established that the transaction is unprofitable to them.

“MNOs have invested billions of naira in expanding their systems to accommodate the USSD needs of DMBs over the years.

“This has resulted in more Nigerians having access to banking services in addition to enabling banks to trim down costs by requiring less branches to service their growing customers.

“Unfortunately, MNOs are not getting paid for their services and the debt that stood at N42 Billion in 2021 has now risen to over N120 Billion.

“It is obvious that the level of debt is unsustainable given the time/value huge cost of the continuous upgrade and operation of the systems and infrastructure dedicated to supporting USSD transactions of DMBs.

“In view of the foregoing, unless DBMs meet their debt obligations, MNOs will disconnect all banks indebted to them for USSD services rendered.”

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