Telcos might cut off banks from USSD services over N250bn debt – MTN CEO

The Chief Executive Officer (CEO) of MTN Nigeria, Karl Toriola, has disclosed that banks might be cut off from the Unstructured Supplementary Service Data (USSD) platform due to debt incurred from using the quick codes by their customers.

Also known as quick or feature codes, USSD is a global system for mobile communications (GSM) protocol used to send text messages and initiate financial transactions such as cash transfers, data purchases, balance enquiries, and payments of bills and services among others.

Recall that in 2019, telecommunication companies (telcos) said they could no longer provide the services free of charge and proposed a cut of N4.50k per 20 seconds from the charges paid by customers to the banks.

However, banks rejected the proposal, arguing it would raise costs by 450 per cent.

In March 2021, telcos threatened to suspend the USSD service over banks’ accumulated N42 billion debt, but the move was halted by the then-Minister of Communication and Digital Economy, Isa Pantami.

Mobile network operators (MNOs) and deposit money banks (DMBs) eventually reached a settlement on March 16, 2021, agreeing to adjust the charge on customers to N6.98k for each USSD transaction.

However, the telcos said the debt had risen to N200 billion by November 16.

Meanwhile, according to Gbolahan Awonuga, the executive secretary of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), the debt has further increased to N250 billion.

MTN CEO says banks might be cut off from USSD

Speaking to journalists in Lagos on Monday, October 21, 2024, the MTN CEO said MNOs might suspend supporting the use of USSD service on the network of banking operations subject to regulatory approval.

Toriola attributed this to the mounting debt which he said is becoming unsustainable to the operators.

He, however, expressed optimism that Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN) and Aminu Maida, the executive vice chairman, the Nigerian Communications Commission (NCC), would wade in to provide a resolution.

But if the intervention failed to yield expected outcomes, he said the “operators would be compelled to seek regulatory approval to discontinue allowing commercial banks to run transactions on the platform.”

MTN CEO warns of dire consequences

At the same time, the MTN executive warned that if the government refuses to accede to telcos’ demands for tariff adjustment to reflect the realities of the economy, there will be dire consequences.

He explained that the telecom sector is lying critically ill in the intensive care unit (ICU) and may die if the appropriate measures are not urgently taken.

“MTN and the entire industry are in a dire situation. MTN is loss-making because of the naira devaluation.

“The fundamentals need to change. Tariffs have to be changed. Inflation has continued to go up, affecting the prices of commodities, including foodstuffs and services,” Toriola said.

Toriola noted that the full deregulation of the downstream petroleum sector has resulted in the rise of the pump price of petrol to over N1,000 in the country.

Similarly, he said electricity tariffs have skyrocketed with the removal of electricity subsidies and the grouping of customers into bands by power distribution companies (DisCos).

MTN risks shutting down due to low tariff

Toriola stressed that the telecommunication company is at risk of shutting down if the government doesn’t approve the tariff adjustment requested by the network operators.

“There should be no delusion, if the tariff doesn’t go up we will shut down,” he said.

The MTN CEO said the base transceiver stations (BTS) of the MNOs are powered by diesel and gas in the absence of a dependable power supply from the national grid.

According to him, MTN used to be among the highest payers of corporate income tax to the Federal Inland Revenue Service (FIRS) but the company has gone down to zero since the telco stopped making profit.

He revealed that the company has been kept afloat because it’s spending its savings, warning that the industry is living on borrowed time.

“We must return the industry to profitability,” the CEO stated.