FOUR major banks are on the brink of having their Unstructured Supplementary Service Data (USSD) services cut off today due to unpaid debts to telecom operators as five others pay up.
Despite a January 15, 2025, warning from the Nigerian Communications Commission (NCC), which granted operators the green light to disconnect the banks over outstanding payments, these financial giants have yet to meet their obligations, risking widespread disruption to mobile banking services that millions of Nigerians rely on daily.
As of the close of work on Friday, January 24, the four banks had yet to make substantial commitments towards repaying the debt. Nine banks were flagged when the Commission issued the January 15 notice. However, five of the banks paid up but this newspaper reliably learnt from an NCC source that four banks still have outstanding payments.
This was confirmed by the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, who noted that while some banks had responded since the notice was issued, several banks have yet to comply.
However, the NCC source and Adebayo could not confirm the amount received as of the weekend, as funds are still being processed and collated. Information also revealed that some of the owing banks have shifted their stance and are now negotiating, unlike before when they were defiant in the face of the impending sanctions.
While the NCC’s intervention may have caused some Deposit Money Banks (DMBs) to reconsider their positions, a document from the Commission showed that the USSD debt stood at N160 billion as of November 2024.
USSD banking is an SMS-based mobile banking service that allows users to interact directly with their bank via mobile phones. It enables transactions such as money transfers, bill payments, and airtime purchases without requiring internet access. This service is particularly valuable for users without smartphones or internet connections and is seen as a crucial tool for deepening financial inclusion, especially in remote areas.
The imminent suspension of the USSD service is expected to significantly disrupt the banking community. In addition to the threat of disconnection, the NCC issued a public notice last week stating that it would withdraw the shortcodes allocated to the nine affected banks after January 27.
In December 2024, the NCC and the Central Bank of Nigeria (CBN) issued a joint circular to Mobile Network Operators (MNOs) and banks outlining guidelines to resolve the debt issue.
The circular, dated December 20, 2024, and signed by Oladimeji Taiwo, Ag Director of the Payments System Management Department at the CBN, and Chizua Whyte, Head of Legal and Regulatory Services at the NCC, outlined specific measures for debt settlement.
According to the circular, DMBs must settle 85 per cent of all outstanding invoices issued after implementing Application Programming Interfaces (APIs) by December 31, 2024. Furthermore, all future invoices must be settled at 85 per cent within one month of issuance.
For invoices predating the API implementation, banks must pay 60 per cent as full and final settlement. Payment plans, whether in a lump sum or instalments, must be finalised between DMBs and MNOs by January 2, 2025. If instalments are proposed, these plans must consist of equal monthly payments, with all payments completed by July 2, 2025.
It should be noted that MNOs and DMBs have been at odds over the appropriate USSD pricing model for financial transactions, the transparency of charges, the mode of collection, and liability for the outstanding and ongoing service fees.
In March 2021, the banks and telecom companies agreed upon a per-session price of N6.98 (which included settling any outstanding fees) after the CBN and NCC intervened. However, the banks have allegedly been deducting the N6.98 per session from their customers without remitting the payment to the MNOs.
Following the joint circular issued in December, the NCC approved MNOs to disconnect nine banks if they failed to settle their debt by January 27. The affected banks include Fidelity Bank, First City Monument Bank (FCMB), Jaiz Bank, Polaris Bank, Sterling Bank, United Bank for Africa (UBA), Unity Bank, Wema Bank, and Zenith Bank.
Meanwhile, the Socio-Economic Rights and Accountability Project (SERAP) has filed a suit against the Federal Government and the Nigerian Communications Commission (NCC) at the Federal High Court in Abuja, challenging the 50 per cent telecom tariff increase. SERAP describes the hike as unconstitutional, arbitrary, unlawful, unfair, and unreasonable.
The NCC recently approved the increase in tariffs. As a result, the average call price will rise from N11 to N16.5 per minute, the cost of 1GB of data will increase from N287.5 to N431.25, and SMS prices will go up from N4 to N6.
In the suit, numbered FHC/ABJ/CS/111/2025, filed over the weekend, SERAP seeks a court ruling on whether the NCC’s decision to approve the tariff hike is arbitrary, unconstitutional, unlawful, unfair, unreasonable, and inconsistent with citizens’ rights to freedom of expression and access to information.
No date has been fixed for the hearing of the interim application and the substantive suit. SERAP also requests a declaration that the NCC’s decision to approve the tariff increase is unconstitutional and unlawful. It is arbitrary, unfair, and unreasonable, violating citizens’ rights.
The organisation seeks an interim injunction to restrain the NCC, its officers, agents, and anyone acting on its behalf from implementing or enforcing the tariff hike.
In the suit, SERAP argues that legal and constitutional provisions, along with international standards on freedom of expression and access to information, form the basis for the legality of such decisions. The organisation contends that the requirements of fairness and reasonableness constrain the NCC’s statutory powers to approve tariff hikes.
The suit, filed by SERAP’s lawyer Ebun-Olu Adegboruwa (SAN), asserts that the NCC must act fairly and reasonably when exercising its powers, particularly concerning the telecom tariff hike.
“The NCC is required under the legal provisions on consumers’ rights and constitutional and international standards on freedom of expression and access to information to base its decision on reasonable interpretations of its enabling statutes and guidelines and other relevant legal frameworks and to follow due process.
“The exercise of the statutory powers of the NCC in approving the telecom tariff hike is a grave violation of the provisions of the Federal Competition and Consumer Protection Act 2018, the Nigerian Constitution 1999 (as amended), and the African Charter on Human and Peoples’ Rights to which Nigeria is a state party.
“These legal and constitutional provisions and international human rights standards recognise that every individual has the right to an equal opportunity to receive, seek, and impart information through any communication medium without discrimination,” SERAP stated.
THIS came as the latest report by the Global System for Mobile Communications Association (GSMA) revealed that telecom companies in Nigeria will be able to address a funding gap of at least N551.23 billion ($360 million) needed for the rollout of 4G infrastructure following the NCC’s approval of the 50 per cent hike in tariffs.
In the report titled “Sub-Saharan Africa 2024 Year in Review,” the global body for telecommunications highlighted that Nigeria requires $360 million to achieve 98 per cent 4G coverage.
The country reached 84 per cent 4G coverage in 2024, up from 41 per cent in 2019, although rural areas still lag with only 48 per cent coverage. The report emphasised that removing specific taxes on telecom infrastructure and revising tariff prices would unlock an investment of N244.99 billion ($160 million), reducing the funding gap for 4G infrastructure by 44 per cent.
“Policy reforms to remove sector-specific taxation on infrastructure and remove retail price regulation would reduce the investment gap by 44 per cent to $200 million,” GSMA stated.
4G is currently the dominant network in Nigeria, accounting for 46.27 per cent of the total mobile subscription base of 157.32 million as of October 2024. Expanding 4G coverage is critical for improving telecom services in Nigeria, where mobile connections are central to daily life. Closing the gap will boost 4G adoption and increase telecom companies’ average revenue per user, enhancing their competitiveness within the African market.
However, despite the importance of expanding 4G and other network infrastructures, telecom operators have faced mounting challenges, leading to reduced investments. Between January and September 2024, MTN Nigeria’s capital expenditure (capex) dropped by 27.79 per cent to N217.64 billion, while Airtel’s capex fell by 36.59 per cent to $149 million.
MTN Nigeria CEO Karl Toriola warned in 2024 that telecom operators would face a tough choice between shutting down operations or incurring significant losses without tariff adjustments. Operators, whose operating costs had risen by around 300 per cent, had been lobbying the NCC for a 100 per cent tariff hike.
After several months of consultations and studies, the NCC approved a 50 per cent increase in calls, SMS, and data prices, citing the need to ensure the sustainability of the telecom sector.
“The approved adjustment is aimed at addressing the significant gap between operational costs and current tariffs while ensuring that the delivery of services to consumers is not compromised,” the NCC said.