Telecoms

Why telecoms interconnect debts will continue to rise—Report

 

The interconnect debt among operators in Nigeria’s telecommunications sector may continue to rise because there is currently no regulatory framework on debt settlement in the sector, New Telegraph has learnt. This is according to the report of a recent survey by Research ICT Africa (RIA), which pointed out that absence of a regulatory measure has been fuelling the increase in debts among operators.

The Nigerian Communications Commission (NCC) had recently lamented the impacts of huge interconnect debts in the sector, which it said had risen to N165 billion as at June this year. The telecoms regulator has been intervening by mediating for peaceful resolution among the operators.

However, RIA in its report titled report titled ‘The State of ICT in Nigeria 2018’ said the fact that there is no regulatory framework to address the issue has been encouraging operators to continue to owe one another. “Stakeholders interviewed for this report say there are also no regulatory sanctions or penalties against corporate debtors and defaulting operators even within the existing interconnect framework, meaning that the only recourse available to any aggrieved entity is in the context of civil pursuits of debt recovery. Yet even this is fraught with judicial delays and brand risks, so the business culture tends to allow debtors to go scot-free, leading to impunity with respect to breaches in the conditions of business contracts, even among telecoms companies” RIA said in the report.

It noted that there is also a growing debt crisis in relation to large exposures to local financial institutions, defaults on vendor payments interconnect bills and profit share payments due to non-core operators such as value-added services (VAS) players, and outstanding rentals or leases on towers by operators whose base station network is dependent on third party infrastructure providers.

 

The report pointed out that the biggest operators appear to be holding on to large portions of industry debts. “These debts are growing and are gradually becoming unmanageable. If the current situation is not urgently addressed, the risk of business failure looms for lagging operators, and indeed for the sector overall, and this situation will remain in the short and medium term, with potentially perilous effects on the national economy” it warned.

There have been repeated complaints within the industry that some operators have not settled their bills for more than three years. “Though the regulator says it has helped to resolve over 60 percent of 2016 interconnect bills, there is no regulatory arrangement in place to assist operators (especially VAS players, tower companies and interconnect houses) to navigate the complexities involved in estimating, reconciling and settling what should otherwise have been regular commercial debts incurred in the ordinary course of business”.

Aside the debts between the major telecom operators, VAS providers, who are smaller players, are also bearing the brunt of debts by the big telcos. One of the service providers, had recently lamented that his company had not been paid by the MNOs since two years. “For the last two years, we have not been paid by the MNOs for the services run on over their networks. Some of us are just struggling to remain in business. Some are owed for five years and what they are now doing is that if they owe you for three years, they try to pay you for two months. Some VAS providers have been asked by the MNOs to come and collect recharge cards value of their money. Are we going to stop our business and open recharge card shop? They are owing us hundreds of millions and we want the NCC to come to our rescue” he said.

Confirming the debt of the MNOs, the National Coordinator, Wireless Application Service Providers’ Association of Nigeria (WASPAN), the umbrella body of the VAS providers, Mr. Chijioke Ezeh, said the debt issue has become a major challenge facing the association’s members. He however frowned at the suggestion by the MNOs to pay their debt with recharge cards, saying that such is ridiculing the VAS business. “I have told all members of WASPAN not to collect recharge cards from any operator; they have to pay the money they are owing. But I am aware they pushed forward the idea because some other service providers that are not member of WASPAN have cheapened themselves by accepting payment with recharge card in other not to lose completely”.

 

 

 

 

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