HomeNewsNigeria's Telecom Sector Faces Crisis as Interconnect Debts Soar

Nigeria’s Telecom Sector Faces Crisis as Interconnect Debts Soar

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The Nigerian telecommunications sector, valued at $76 billion, faces a growing crisis due to escalating interconnect debts, alongside other challenges like multiple taxation and vandalism. Interconnect debts, liabilities incurred by operators for call terminations on other networks, have been a persistent issue for over 15 years and are now reaching critical levels.

Interconnection, crucial for a seamless network experience, is under threat as these debts rise, affecting not just Mobile Network Operators (MNOs) but the entire telecom sub-sector, including Value-Added Service (VAS) providers and Internet Service Providers (ISPs).

As of the end of 2023, MNOs alone had an outstanding interconnect debt of around N70 billion. This debt is causing significant friction within the industry and could lead to conflicts among operators.

A document from the Nigerian Communications Commission (NCC), titled ‘Pre-Disconnection Notice’, reveals a partial disconnection of Globacom from MTN Nigeria due to unresolved interconnect charges. The NCC, through its Director of Public Affairs, Reuben Muoka, stated that Globacom had no significant justification for non-payment of these charges.

This disconnection will impact millions of Globacom subscribers, who might face difficulties in making calls to the MTN network. The disconnection is set to last until the NCC decides otherwise.

The industry has seen a dramatic increase in debt, from N20 billion in 2013 to N165 billion in 2018. Although some debts have been cleared, MTN, the largest operator in Nigeria, is reportedly owed about 50% of the total outstanding amount.

The former Executive Vice Chairman of NCC, Prof. Umaru Danbatta, had acknowledged the debt as a major obstacle to infrastructure expansion and healthy competition. With the current partial disconnection, about 61 million Globacom subscribers could experience disrupted services.

According to the NCC, MTN has the largest market share in Nigeria with 85 million subscribers. Airtel follows with 60 million users, and 9mobile services 13.7 million users. The disruption could lead to a significant revenue loss for the operators, given the industry’s average revenue per user of about $3.8.

Telecom expert Kehinde Aluko attributes this conflict to poor corporate management and inadequate interconnection agreements. The debt situation hinders the government’s socio-economic agenda and compromises service quality for subscribers.

While operators blame each other with allegations of inflated figures and faulty billing systems, the role of clearinghouses, important for international billing and currency exchange, is also under scrutiny.

According to a report by The Guardian, Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), expressed concern over the trust issues and growth hindrance the debt could cause within the industry.

The President of the National Association of Telecoms Subscribers of Nigeria (NATCOMs), Chief Deolu Ogunbanjo, sees the NCC’s move as a positive step, emphasizing the importance of timely debt settlement for industry health. He also called for similar action against banks owing Unstructured Supplementary Service Data (USSD) fees to telecom operators.

Ogunbanjo urges Globacom to settle its debts promptly, warning that failure to do so could lead to a subscriber exodus and impact the firm’s reputation.

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