MTN Nigeria’s CEO, Karl Toriola, has sounded the alarm over a staggering N250 billion debt owed by banks for USSD services. The telecom giant is considering disconnecting banks from the USSD platform if the debt keeps piling up. This move could disrupt millions of Nigerians who rely on USSD codes for their daily banking needs.
Mounting Debt Jeopardizes Essential Services
The debt banks owe to telecom operators for USSD services has skyrocketed to N250 billion.
This enormous sum has been accumulating since 2019 when telcos proposed a charge of N4.50 per 20 seconds for USSD transactions. Banks pushed back, arguing it would hike costs for customers by 450%. Despite a 2021 agreement setting the charge at N6.98 per transaction, the debt continues to grow. Now, telcos might disconnect banks from USSD services, pending regulatory approval.
Toriola expressed that the situation is unsustainable for telecom operators. Immediate action is needed to prevent disruption of crucial financial services.
Economic Strain Pushes Telecoms to Breaking Point
The telecom industry faces severe challenges due to inflation and currency devaluation.
- Operational Costs Soaring: Fuel and electricity expenses are draining resources.
- Naira Devaluation Impact: Profitability has plummeted, with MTN reporting losses.
- Inflation Effects: Rising prices affect both consumers and businesses alike.
“If the tariff doesn’t go up we will shut down,” Toriola warned bluntly. Without tariff adjustments, the telecom sector’s survival is at stake.
Regulators Urged to Resolve the Impasse
Despite the grim outlook, there’s hope that authorities will step in.
Toriola is optimistic that the Central Bank Governor, Olayemi Cardoso, and NCC’s Executive Vice Chairman, Aminu Maida, will help resolve the standoff. If unresolved, operators may seek approval to halt USSD services for banks.
Such a shutdown could severely impact those who depend on USSD for banking. Finding a sustainable solution is urgent.
Lessons from NITEL: A Cautionary Tale
Toriola cautioned against repeating past mistakes that led to NITEL’s downfall.
He emphasized the telecom industry’s vital role in supporting other sectors. Currently, the industry survives on savings and is “living on borrowed time.” The GSMA has also called for tariff adjustments to ensure sustainability.
Allowing the industry to falter could have dire consequences for Nigeria’s economy. Swift action is imperative to avert a crisis.
