Telecommunications

Nigerians Now Pay Mandatory N6.98 for USSD Transactions

Published

3 years ago

June 4, 2021

Many users of USSD services in Nigeria on Friday started to see a notice to pay N6.98 for each transaction session.

USSD is a critical channel for delivering financial services, especially for those who do not have access to physical banking infrastructure or internet services.

“Welcome to USSD Banking,” one notice said. “Please note, a N6.98 network charge will be applied to your account for banking services on this channel.”

The decision to charge users was reached in March by the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), Channels reported.

The decision was part of an agreement reached with deposit money banks following a disagreement between banks and telecom firms over USSD and other text message transaction requests.

“Effective March 16, 2021, USSD services for financial transactions conducted at DMBs (Deposit Money Banks) and all CBN-licensed institutions will be charged at a flat fee of N6.98 per transaction,” a March statement signed by the CBN and NCC partly read.

The charge is expected to be withdrawn from users’ bank accounts and remitted to mobile network operators, who provide infrastructure for the service to operate.

“The general public is reminded that the USSD channel is optional, as several alternative channels such as mobile apps, internet banking and ATMs may be used for financial transactions,” the CBN and NCC said in its joint statement in March.

“The CBN and NCC shall continue to engage relevant operators and all stakeholders to promote cheaper, seamless access to mobile and financial services for all Nigerians.”

Many Nigerians took to Twitter early Friday to express their dismay over the charges.

There are concerns about how the new charge will affect financial inclusion, particularly for people who do not have access to internet services.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Telecommunications

MTN, Telecom Firms Urge Government Support for Tariff Hike Amid Economic Downturn

Published

5 days ago

October 17, 2024

Yetunde Olugbenga

MTN Nigeria and other telecommunication companies have requested that the federal government support their plan to increase tariffs to ensure business continuity.

The request was made due to the current economic downturn that has hindered the operations of many companies.

During a panel session at the 30th Nigerian Economic Summit on Tuesday in Abuja, titled Navigating Business Growth in a Volatile Environment, MTN’s Chief Financial Officer (CFO), Modupe Kadri, highlighted that Nigeria’s economy, impacted by foreign exchange fluctuations, has affected the effective functioning of the telecommunications industry, including MTN.

Kadri noted that with the current economic situation, the electricity and fuel sectors have experienced increases.

He therefore said for the telecom sector to remain viable, the federal government must allow similar adjustments in the telecom industry.

According to him, the telecommunications industry is also facing challenges because much of their equipment is heavily import-dependent. Despite this, the sector has not received regulatory approval to adjust its prices for over a decade.

“For ten years now, telecommunication companies haven’t been permitted to increase prices, and this regulation is not providing us with a level playing field to operate. If we are to stay in business, this policy must be reviewed, similar to how electricity and fuel prices are adjusted to reflect current economic realities,” he stated.

“Our business is mainly dependent on foreign exchange, so customers need to understand that for them to receive the services they desire, it costs money,” he added.

He noted that just like the electricity and fuel industries contribute to the nation’s GDP, the telecommunication industry also contributes to the nation’s GDP, and similar measures should be applied across sectors.

“The telecommunications industry contributes 16 percent to the GDP, and it is not something that you can mess around with,” he reiterated.

Kadri therefore sought government intervention to increase tariffs to ensure business continuity.

Telecommunications

Telecom Firms Face N56 Billion Monthly Diesel Bill Amid Power Woes

Published

4 weeks ago

September 25, 2024

Samed Olukoya

The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has said telecommunication companies spend 35 percent of their operating expenses on diesel due to the unreliable electricity supply in Nigeria.

According to industry estimates, telecom operators use an average of 40 million liters of diesel per month to power their sites. The price of diesel jumped to N1,406.05 per liter in August 2024, representing a 64.58 percent increase from N854.32 per liter in August 2023, according to the National Bureau of Statistics (NBS).

This implies that the cost of powering Nigeria’s communication infrastructure surged from N34.17 billion in August 2023 to N56.24 billion in August 2024.

Gbenga Adebayo, President of ALTON, confirmed the current diesel consumption, stating, “It will be over that now.” According to Harmanpreet Dhillon, Airtel Nigeria’s chief technical officer, the telco spent N28 billion on diesel in May 2024.

During a media roundtable, Dhillon said that the company was exploring hybrid solutions—lithium batteries and solar—to lower its energy bill.

McKinsey recently noted that companies could save up to 30 percent on energy costs by adopting renewable energy solutions and other technologies.

“The biggest constraint in the telecom industry is high energy cost. If the government had continued to fulfill its part of the bargain it made in the early 2,000s to provide 18 hours of electricity, the heavy logistics and the capital we spend today from powering sites would not be there,” said Adebayo of ALTON.

Telecommunications

MTN Nigeria Revises IHS Lease Terms, Aims for N100 Billion Yearly Savings

Published

2 months ago

August 20, 2024

Samed Olukoya

MTN Nigeria, one of the country’s leading telecommunications giants, has successfully renegotiated its tower lease agreements with IHS Towers, a strategic move expected to save the company approximately N100 billion annually.

This renegotiation is a significant step in MTN Nigeria’s ongoing efforts to improve its financial performance amid Nigeria’s challenging business environment.

The revised terms of the lease agreements introduce several critical changes aimed at reducing operational costs and mitigating the impact of Nigeria’s volatile currency fluctuations.

The new agreements reduce the US dollar-indexed component of the leases, which has now been linked to a discounted U.S. consumer price index (CPI).

This change is crucial in lowering MTN Nigeria’s exposure to the fluctuating naira, providing the company with a more predictable and stable cost structure.

Also, the renegotiation removes technology-based pricing, simplifying the company’s cost framework. Payments for tower upgrades will now be based on tower space and power consumption, rather than the technology deployed on the towers.

This shift is expected to bring more clarity and control over MTN Nigeria’s infrastructure expenditure.

Another key aspect of the renegotiation is the introduction of an energy cost component indexed to the cost of diesel power.

Given Nigeria’s unreliable power supply, telecom companies like MTN Nigeria rely heavily on diesel generators to power their infrastructure.

By linking energy costs to diesel prices, MTN Nigeria can better manage these expenses, which have historically been a significant burden on its operations.

The renegotiated terms also include provisions for discounts and incentives over the life of the contracts, further enhancing the financial benefits for MTN Nigeria.

These changes are expected to boost the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, positioning it for stronger financial performance in the coming years.

MTN Nigeria’s strategic renegotiation comes at a time when the telecommunications industry is grappling with increasing operational costs and economic instability.

The savings generated from these new lease terms will not only improve the company’s bottom line but also allow it to reinvest in critical infrastructure and expand its services across the country.

As MTN Nigeria continues to navigate the complexities of the Nigerian market, the successful renegotiation of its tower lease agreements with IHS Towers underscores its commitment to maintaining financial stability and delivering value to its shareholders.

The telecom giant’s proactive approach to cost management and risk mitigation sets a positive precedent for other companies in the industry facing similar challenges.