MTN Nigeria has successfully recovered ₦32 billion from Nigerian banks, addressing part of the ₦74 billion debt owed for Unstructured Supplementary Service Data (USSD) services. However, ₦42 billion remains outstanding, underscoring ongoing tensions between banks and telecom operators.
Regulatory Intervention: A Step Towards Resolution
In December 2024, the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) intervened to resolve the protracted USSD debt issue. They issued a directive mandating that banks pay 85% of the ₦250 billion owed to telecom operators by December 31, 2024. This amounted to a required payment of ₦212.5 billion. Additionally, banks were instructed to settle 85% of new invoices within one month and agree on a repayment plan by January 2, 2025, to clear 60% of outstanding debts before accessing telecom USSD platforms. Non-compliance would attract sanctions, including fines and service restrictions.
The Genesis of the USSD Fee Dispute
The USSD fee dispute has been ongoing for several years, primarily due to disagreements over charges and revenue sharing between banks and telecom companies. Despite multiple regulatory interventions, including a 2021 NCC directive mandating direct deductions from customer accounts, consistent settlements have not been achieved. Banks have often resisted payments, citing concerns over disputed charges and the relevance of USSD technology. Some bank executives have argued that USSD is becoming obsolete and have questioned the fairness of the charges imposed by telecom operators.
Financial Implications for MTN Nigeria
The recovery of ₦32 billion has provided a slight boost to MTN Nigeria’s earnings for the full year 2024, contributing 3.1% to its service revenue. The company’s service revenue grew by 35.9%, reaching ₦3.3 trillion in 2024, up from ₦2.4 trillion in 2023. However, despite this revenue growth, MTN Nigeria reported an after-tax loss of ₦400.44 billion in 2024, nearly triple its ₦137.02 billion loss in 2023. This significant loss is primarily attributed to the depreciation of the naira, rising tower lease costs, and increased foreign currency obligations exacerbated by foreign exchange volatility.
The Path Forward: Striving for Sustainable Solutions
While the recent payments by banks mark progress, the remaining ₦42 billion debt highlights the need for a sustainable resolution to the USSD fee dispute. The telecom sector has long advocated for stricter enforcement of payment agreements, arguing that inconsistent payments threaten financial sustainability and the provision of essential services. The directives from the CBN and NCC aim to establish a structured payment framework to address these concerns. However, it remains to be seen whether all banks will comply with the regulatory deadlines and whether the imposed sanctions will effectively deter non-compliance.
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Conclusion
The ongoing USSD debt dispute between Nigerian banks and telecom operators like MTN Nigeria reflects broader challenges in the intersection of finance and telecommunications. Resolving these issues is crucial not only for the financial health of the companies involved but also for the millions of Nigerians who rely on USSD services for banking and other essential services. As the situation develops, stakeholders and regulators must collaborate to ensure a fair and sustainable solution that supports the growth and stability of both sectors.