Telecoms operators worried as interconnect debt overhang peaks at N20 billion

By Olubunmi Adeniyi

Lagos. December 14, 2012: There is a sweeping wave of anxiety among the big telecoms operators over the huge interconnect debts totalling over N50 billion and threatening the survival of the vibrant telecoms sector.

The controversial huge debt profile and measures that can be taken to address the issue formed the key focus of a forum convened by the industry regulator yesterday in Lagos.

Despite the regulatory measures put in place by the Nigerian Communications Commission to guide and ensure seamless interconnection in the Nigerian telecoms industry, operators reckon that the issue remains a major source of conflict, especially in the wake of rising indebtedness in the sector.

As the debts threaten to eliminate operators from the telecoms market, NCC held a regulatory forum on the high incidence of interconnection indebtedness in the Nigerian telecommunications industry to proffer solutions to the problem.

Technology Times gathered from a cross section of discussion at the forum that the high profile interconnect debts among the operators in the telecoms industry  has exceeded N20 billion.

While giving his welcome remarks at the forum, Eugene Juwah, Executive Vice Chairman, NCC, notes that the issue of interconnection indebtedness is peculiar to Nigeria as it has been observed that the problem does not exist in other jurisdictions.

The telecoms regulator says that the issue has emerged as a major source of conflict and challenge which has the potential of distabilising successes recorded in the Nigerian telecoms industry.

Juwah adds that over time NCC has observed that some operators take advantage of the Guidelines on Procedure for Granting of Approval to Disconnect Telecommunication Operators by deliberately refusing to promptly discharge their financial obligations towards their interconnect partner.

On this note, the telecoms regulator announced that it had on November 30 this year signed the new ‘Guidelines for Procedure for Granting of Approval to Disconnect Telecommunication Operators’.

The provisions of these guidelines have taken into consideration the disconnection of all operators, including interconnect exchanges and has shortened the process for granting approval for disconnection.

According to him, this was possible because of the process that had to be followed before the Commission could authorise the disconnection of an operator.

Juwah says that several operators had also noted that Interconnect Exchanges had also become a major part of the problem. With the rising debt profile by interconnect exchanges that now owe other operators interconnection charges, they are compounding the problem they were licensed to alleviate.

“This is a measure to ensure that interconnection indebtedness is not detrimental to the effective administration of viable telecommunication businesses,” Juwah says.

The forum was largely attended by top executives of telecoms companies, top management staff of telecoms companies, telecoms industry stakeholders and industry analysts.

Yetunde Akinloye, Assistant Director, Legal and Regulatory Services, NCC, who gave brief overview of the telecoms network interconnection regulations 2007 and guidelines on procedure for granting approval to disconnect telecoms operators, said that interconnection was critical as it enabled subscribers to communicate across and within networks.

Akinloye assures that the new guidelines would promote public confidence and ensure stability, transparency, competition, innovation and growth in the telecoms industry.

Also speaking at the forum, Stephen Bello, former, Acting EVC of NCC lists the causes of high incidence of indebtedness in the Nigerian telecoms industry to include poor corporate management, diversion of telecoms revenue to private investments in other sectors and poorly-drafted interconnection agreement.

Bello explains that interconnection indebtedness slows down government‘s socio-economic agenda on expansion of network spread and quality of service.

“Interconnect in general has the effect of introducing inefficiency into the telecommunications industry and the entire national economy, unfair treatment of interconnecting partners and prevents subscribers from having value for their money,” he adds.

Abimbola Akeredolu, Partner, Banwo and Ighodalo, a Lagos-based law firm, drops the hint that interconnect indebtedness in the Nigerian telecommunications sector is currently put at about N15 to N20 billion.

Speaking on the theme, “What is the solution to interconnection indebtedness in Nigeria”, she reveals that about 60 per cent of these debts are in dispute with some telecoms operators alleging inflation of the figures which they attribute to their competitors’ faulty billing system.

Akeredolu notes that the large volume of the interconnect debts in the telecoms sector is often linked to disparity issue in revenue sharing ratios between mobile telephone operators and their fixed wireless counterparts.

The key telecom operators who were present at the forum said that their major concern now is how the regulators will help them to recover the previous debts and forge ahead with applying the new guidelines in their dealings. They pleaded that the NCC should provide a definitive date for settlement of interconnection debts.

Oyeronke Oyetunde, Regulatory Affairs Manager, MTN Nigeria wants NCC to intervene promptly to address this issue underscoring that that huge interconnect debts running into billions of Naira is currently plaguing the sector.

Tunde Aremu, Regulatory Affair Manager, Globacom, who also notes that the issue of interconnection requires urgent intervention from the NCC, said “there is indiscipline in the industry because of the past issues. We need to ease the past first.”

While confirming the N20 billion interconnection debt, Aremu laments: “how do we recover this huge amount back?”

In his comment, Frederick Emakpaire, Manager Interconnect, Etisalat, says that most of these interconnect debts are being owed indirectly by the clearing houses.

Because of this indebtedness, majority of the operators are now opting out of interconnect clearing houses and now dealing with each other on individual basis, the Etisalat executive says.

A clearinghouse is a company or association that transfers billing records and/or performs financial clearing functions between carriers that allow their customers to use each other’s networks.

The clearing house receives, validates and accounts for telephone bills for several telephone service providers. Clearinghouses are particularly important for international billing because they convert different data record formats that may be used by some service providers and convert for the currency exchange rate.

Proffering solution to the problem, Olasupo Shasore, SAN, Partner, Ajumogobia and Okeke, agrees that mediation and arbitration should be explored before a network is disconnected as well as migration of traffic and debt settlement through an Interconnect clearing exchange.

Shasore advises that telecoms operator to sign up to a reputable interconnect exchange point.