Telecoms- N60bn Interconnect Debt Threatens Industry
The Nigerian telecommunications industry is currently plagued by massive interconnect debt. While the verified figure is put at N60bn, the unverified is said to be around N1.27tn.
A massive interconnect debt valued at more than N60bn is threatening the nation’s telecommunications industry, investigation has revealed.
Interconnect debt results when an operator fails to settle the cost of termination of service rendered to it by another operator in the industry.
Interconnection is important in the telecoms industry because it enables the subscriber to experience the smoothness of a connected or one network.
Thus, with interconnection, a subscriber does not care and does not need to know whether the person at the other end of the network subscribes to another network operator.
Investigations revealed that but for the stringent conditions put in place for disconnection by the industry regulator, the Nigerian Communications Commission, some operators would have been disconnected as a result of high interconnect debt.
It was also learnt that interconnection was one of the issues that the regulator struggled to handle from time to time for the peace and harmony of the industry.
Apart from high interconnect debt, other interconnection issues troubling the industry include unverified interconnect debt claims, a just and equitable interconnect rate, interconnect infrastructure and policy.
The regulator is currently involved in an effort to determine a cost-based interconnect rate for the industry. It had hired PricewaterhouseCoopers to help it carry out a study for the determination of a cost-based interconnect rate.
The consulting firm presented its findings to the NCC and operators recently and a determination of new interconnect rate is expected as early as April.
Industry sources claimed that the unverified interconnect debt in the telecommunications industry was as high as N1.27tn.
The President, Association of Telecommunications Companies of Nigeria, Mr. Olusola Teniola, confirmed the high incidence of unverified interconnect debt in an interview with our correspondent, but added that only about N60bn of such claims had been verified.
Teniola said that the problem of high interconnect debt was impacting on the ability of operators to raise the money required for the smooth operation of the industry, noting that with reducing margins, the ability of the operators to raise funds was fundamental.
“It is a serious issue for the industry because it impacts on the ability of the industry to raise funds. This industry requires long-term financing,” he stated.
The Chairman of the Board of the NCC, Senator Olabiyi Durojaiye, confirmed at a recent meeting that the regulatory agency had been miffed by the high incidence of unpaid interconnect debt.
According to him, the problem is one of the issues that the regulatory agency sought to address through the recent Corporate Governance Code, which the commission articulated and gave the industry recently.
Durojaiye said, “The commission is particularly concerned with issues of massive interconnection indebtedness and unethical practice of masking of international calls. This sort of unethical behaviours is part of what the Code of Corporate Governance is set up to address.
“Henceforth, the commission will be taking very tough measures against any detected unethical behaviour and industrial malpractice in order to safeguard the health of the entire industry. Compliance with the spirit of the code is a necessity.
“Going forward, the commission, as part of its initiatives to ensure compliance, will intensify monitoring level of compliance. To encourage satisfactory compliance, the commission has instituted an annual reward system to recognise and commend the most compliant companies.”
In promoting the corporate code governance, the NCC has held three workshops across the country. The first one was held in Lagos; the second in Enugu, while the third was held in Kano.
A non-Executive Commissioner of the NCC, Mr. Clem Baiye, said apart from interconnect debt, some operators in the industry had acquired a reputation for not settling their debts promptly.
He expressed hope that the Corporate Governance Code would instil in the operators the consciousness of discipline required for ethical practices and self-regulation.
However, Teniola believes that the articulation of the Corporate Governance Code by the industry regulator is not enough to resolve the recurring problem of interconnect debt.
For the ATCON boss, the NCC needs to go beyond articulation to enforcement of the code, because according to him, the policy for interconnection is even more important.
He stated, “The Corporate Governance Code in writing will not solve the problem if it is not enforced. The need for enforcement cannot be overemphasised.
“The commission can ensure that each operator puts in place an automated robust system that can reconcile the interconnect debt situation. The regulator needs to force operators to pass traffic through interconnect clearing houses.”
Teniola said one of the issues responsible for unverified interconnect debts was that most interconnections happening within the industry were through peer-to-peer mechanism.
According to him, only 10 per cent of traffic must pass through interconnect operators.
If this percentage is raised to at least 50 per cent, he said, operators would have the confidence to invest in interconnect infrastructure.
This, he added, would eliminate the high incidence of disputed and unverified interconnect debts and invariably contribute to prompt settlement of such debts.