MTN’s Nigerian business will get a boost in revenue as authorities in the West African country have ended a stalemate between mobile operators and banks that had kept telecoms companies’ from recognising certain financial transactions through banking systems.
On Friday the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) moved to resolve the now three-year impasse between the two sectors with a number of directives.
The authorities said they were “deeply concerned that the protracted dispute” between deposit money banks (DMBs) and mobile network operators (MNO) over the usage of the MNOs’ USSD platform for banking services “has remained unresolved despite best efforts”.
In essence, the fight between the two groups is over who should pay for the use of USSD for financial transactions.
USSD is a technology that allows customers to perform financial transactions on the most basic of phones, meaning those without smartphones, allowing them to transact without issue. The technology allows customers to do a range of activities, including checking account balances, transfers, and airtime top ups. The battle peaked in 2019 when it was estimated that banks owed mobile operators over 100 billion naira (about $214m or R4bn) for the use of USSD.
Mobile operators threatened to cut off access to the technology, which would have had a significant effect on those who rely on USSD. for financial transactions.
Business Day understands the move is good for Nigeria's telecommunication players as operators have not recognised this segment of revenue historically.
The CBN and the NCC have given banks and mobile operators a number of directives.
Among the six items, banks must pay 85% of all outstanding invoices issued after the implementation of application programming interfaces (API) with mobile operators in February 2022. These API’s allow for bank and mobile provider systems to work together. Payments must be made by December 31.
Similarly, 85% of all future invoices “must be liquidated within one month of service of the invoice”.
“All DMBs and MNOs are directed to ensure full implementation of the directives contained in this joint circular and to note that non-compliance will attract necessary sanctions within the respective regulatory powers of the CBN and the NCC,” said the authorities.
MTN’s concomitant increased earnings will provide some relief in Nigeria, where the group has been battered over the past year.
Like many other companies operating in Africa’s largest economy, MTN has been a casualty of the devastation caused by the Nigerian naira’s more than 90% plunge since mid-2023.
The group dipped into the red at the halfway stage of its financial year, the first time the telecoms major has reported a loss since 2016, as the further devaluation of the naira and the conflict in Sudan weighed on results.
The group reported a headline loss per share of 256c for the six months to end-June from headline earnings per share (HEPS) of 260c a year ago. No interim dividend was declared.
Group earnings before interest, tax, depreciation and amortisation (ebitda), excluding one-off items, was down 41.2% to R29.046bn. Service revenue was 20.8% lower at R85.3bn, while total subscribers increased 0.8% to 288-million.
So far in 2024, the naira has lost 74% to the dollar.
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