Mobile Operators in Nigeria Block Texts from Banks Over Debt

MTN, one of Nigeria’s leading mobile phone operators, has announced the suspension of dedicated text message services for banks until their outstanding debt of 120 billion naira (approximately R4.9 billion) is settled.

The operators will disconnect the unstructured supplementary service data (USSD) based on contractual agreements with the banks, according to Gbenga Adebayo, chairman of the Association of Licenced Telecommunications Operators of Nigeria. In a recent phone interview, Adebayo also stated that some banks may be disconnected as early as today. The USSD service is critical in facilitating financial transactions such as transfers, bill payments, and airtime recharges, especially for Nigeria’s unbanked population, which accounts for up to 40% of the population.

For the past two years, Nigeria’s mobile network operators and banks have been at odds over USSD pricing models and fee collection. According to the telecom operators, the outstanding arrears have risen from 42 billion naira in 2021. In order to resolve the issue, industry regulators and the Central Bank of Nigeria intervened in 2021, resulting in an agreement establishing a flat fee of 6.98 naira per transaction.

Despite repeated attempts to engage, Adebayo expressed disappointment with the banks’ lack of action in resolving the matter. He suggested that discontinuing the USSD service might encourage them to come up with a solution. Herbert Wigwe, the CEO of Access Holdings Plc, and the representative working with the telecom operators could not be reached for comment.

Adebayo emphasised that mobile network operators (MNOs) would disconnect banks if their debts were not settled. He explained that, despite the efforts of multiple stakeholders to reach a resolution and avoid any disruptions to services, banks continue to accumulate debt without making the necessary payments.

He cited previous disagreements between MNOs and banks over the appropriate USSD pricing model, charge transparency, mode of collection, and liability for unpaid fees owed to MNOs. In 2021, MNOs considered disconnecting banks due to unpaid debts totalling 42 billion naira at the time. However, the intervention of the Minister of Communication and Digital Economy, Prof. Isa Pantami, and the Nigerian Communications Commission (NCC) prevented this action, as it could negatively impact the government’s digital and financial inclusion policies.

Despite the minister’s intervention and the NCC’s efforts, the banks have been unable to reach a final agreement with the MNOs. According to Adebayo, the contract between MNOs and banks for USSD banking transactions is strictly commercial, and MNOs have the right to discontinue the service if it becomes unprofitable. MNOs have spent a lot of money over the years to expand their systems and meet banks’ USSD needs. Not only has this increased access to banking services for more Nigerians, but it has also allowed banks to cut costs by operating fewer physical branches to serve their growing customer base.

Regrettably, MNOs have not been paid for their services, and the debt owed to them, which was 42 billion naira in 2021, has now risen to more than 120 billion naira. Adebayo emphasised that this level of debt is unsustainable, given the significant costs associated with ongoing system upgrades and the infrastructure required to support USSD transactions for banks. As a result, unless banks meet their debt obligations, MNOs will disconnect all banks that owe them for USSD services rendered.