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These are worrying times for Nigeria’s highly competitive telecommunications market as two of the largest mobile networks are on a collision course over soaring interconnect debts.
According to reliable sources, Globacom, national carrier, is alleged to be owing South Africa’s MTN N2.1 billion in interconnect debt, claiming that this debt dates back to 2009.
In recent times, operating companies have continued to trade tackles over N20 billion interconnection debt owed to one another. “The recent upsurge in interconnect debt is an alarming trend and the first early warning signals of distress in the telecoms industry,” said our source who spoke on conditions of anonymity.
Telecoms companies have been overtly exuberant in the market over the last four year, according to analysts, lowering mobile call tariffs and giving away lots of free minutes in a conscious attempt to lure new telecoms subscribers and retain existing ones.
This move, according to industry analysts, has not only contributed significantly to the steady decline in voice service revenues but has also taken a lot of value out of Nigeria’s telecoms industry.
According to our source, the slow demise of the CDMA (Code Division Multiple Access) sub-sector serves as a vivid example that if this negative trend is left unchecked by the telecoms regulator more value erosion would certainly occur.
“Indeed, recent steep tariff reductions have further impacted value and a direct cause of Quality of Service (QoS) challenges as there are increasing minutes of usage in the telecoms industry without corresponding revenue. If this continues, significant investments will slow,” said our source.
There is tension between both firms, as MTN, is already considering arbitration as the next possible course of action, according to our source. After this option has been fully explored and Globacom is still unable to meet its financial obligation, the source said MTN may disconnect Globacom. This implies that Globacom’s subscribers will be restricted from terminating calls on MTN’s network.
Industry watchers have however warned that disconnection would hurt mobile subscribers, further adding that it could have a negative impact on the already deteriorating QoS levels rendered by operators to Nigeria’s 120 million mobile subscribers. According to them, there is need for the telecoms regulator to take serious actions to compel debtors to pay when issues of indebtedness are established.
BusinessDay sought to know if the telecoms regulator is aware of the current situation. “We are not aware of this development. Interconnection is really a business agreement between two operating companies. So, we do not delve into such matter unless the dispute is brought to the commission.
“If that happens, we can now apply the mechanism of dispute resolution,” said Reuben Mouka, spokesperson of the Commission. In 2012, the Nigerian Communications Commission (NCC) okayed new guidelines for disconnecting operators that default in meeting their interconnect payment obligations as part of new measures to ensure sustainable growth in the telecoms sector.
In spite of this regulatory intervention, the issue of interconnect is still a major source of conflict among telcos as they continually in heated battles over fees owed to one another. According to the guideline, the telecommunications regulator is expected to invite the parties to a hearing to guide its decision.
It may also allow the debtor to deposit 50 percent of the debt in lieu of a disconnection decision. If the NCC finds that the debt has been due for over 60 calendar days, that there is no reconciliation dispute, and that the creditor itself is not owing the NCC any regulatory fees, it may grant the request within 15 working days of conclusion of hearing/submission of relevant documents, according to the guideline.
The guideline also states that the NCC may publish a pre-disconnection notice to subscribers in the newspapers. It may publish names of recalcitrant debtors and it may direct the debtor to connect through a clearinghouse. It may decline to provide regulatory services to the debtor.
“But the reality is that there is no evidence that any mobile operator has been caught by these guidelines in recent times and there are several examples of organisations who have collapsed (NITEL, ZoomMobile) owing other telcos till today,” said our source. The NCC’s cautious approach has not led to the successful conclusion of the aforementioned process in recent times, according to our source.
In 2007, the telecoms regulator had licensed interconnect clearinghouses ostensibly to reduce interconnect indebtedness in the industry. BusinessDay learnt that the clearing houses themselves are now culprits. Attempts to reach Globacom executive for comments failed.
By: Ben Uzor Jr
