Telcos cut off banks over a N120 billion USSD debt

Nigerian telecom companies claim that the Nigerian Communications Commission (NCC) has given them permission to cut off banks that owe more than N120 billion in unstructured supplemental service data (USSD) debt.

This information was released in a statement on Friday in Lagos that was signed by Mr. Gbenga Adebayo, Chairman of the Association of Licenced Telecommunications Operators of Nigeria (ALTON).

He claimed that if banks did not pay the loan, mobile network operators (MNOs) would disconnect them.

Adebayo claimed that the consent was given because banks continued to accrue more debt despite multi-party stakeholder attempts to fix the issue and avoid any negative effects on services.

He asserted that members of the public would remember that MNOs and banks had long-running disputes about the best USSD pricing model for financial transactions, the transparency of charges, the method of collection, and who was responsible for paying the unpaid and ongoing service fees owed to the MNOs.

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

“However, the Minister of Communication and Digital Economy, Prof. Isa Pantami, intervened and asked the MNOs not to disconnect banks as the action will negatively impact on the digital and financial inclusion policy of the Federal Government.

“Unfortunately, the patriotic intervention of the minister and the NCC have been taken for granted by the banks, as two years after, the banks have failed to sign a final agreement,” he said.

It is important to keep in mind that the agreement between MNOs and banks on the use of USSDs for banking transactions is entirely commercial, and MNOs are free to discontinue their services if the transaction is not profitable for them, according to Adebayo.

He pointed out that over the years, MNOs had spent billions of naira improving their systems to meet the USSD requirements of banks.

In addition to allowing banks to reduce costs by needing fewer locations to handle their expanding customer base, Adebayo said that this has increased access to financial services for Nigerians as a whole.

Unfortunately, he claimed, MNOs weren’t getting paid for their work, and the debt—which was N42 billion in 2021 but is now over N120 billion—had grown significantly.

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

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