Stakeholders Fret over Possible Rise in Interconnect Debts

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Emma Okonji

Given the high level of interconnect debts among telecoms operators, industry stakeholders are worried that the debt profile may continue to rise in 2017.
As at 2012, interconnect debt between small and major telecoms operators stood at N20 billion. But the figure rose to N30 billion as at December 2016, a situation that has raised concerns among industry stakeholders who are worried that the figure may continue to rise if adequate measures are not put in place.

Giving reasons why the interconnect debt figure may continue to rise in 2017, the Chief Executive Officer of one of the six Interconnect Clearing Houses in the country, Medallion Communications, Mr. Ikechukwu Nnamani, told THISDAY in a telephone interview that currently Nigeria has no official settlement platform in the telecoms sector, hence operators, especially the bigger operators, continue to settle interconnect debts at will, thereby accumulating the debts to the detriment of smaller operators.

“None of the operators in Nigeria has a settlement scheme in place with their interconnect partners. Invoices are sent out at the end of the month and the operators just sit back and wait for payment from the interconnect partners. It is only when payment is not received after a long period of time that dispute and reconciliation is embarked upon. This has led to high level of disputed interconnect indebtedness,” Nnamani said.

According to him, the cumulative effect of interconnect settlement challenges is that there is today in Nigeria over N30 billion of interconnect debt, while variances in settlement invoice values can be as high as 20 per cent and unpaid invoices ranging from six months to three years in arrears.

In telecoms parlance, interconnect debt is the money owed by an operator for terminating calls generated from its network on another operator’s network, based on the agreed interconnect fee approved by the industry operator, the Nigerian Communications Commission (NCC).

“For a system that is 95 per cent prepaid, the inability to pay for terminated calls cannot be blamed on the subscribers not being able to pay the telecom operators, because up to 60 to 70 per cent of all interconnect debts in Nigeria are disputed debts. This is because over 95 per cent of the interconnect calls are still passed on a peer-to-peer basis among the operators, resulting in disputes and inability to reconcile call records,” Nnamani told THISDAY.

He blamed the situation on lack of official settlement platform for the telecoms industry, and called on the NCC to come up with policies that would address issues with interconnect debts in the country.

He suggested the introduction of Nigeria Interconnect Settlement Scheme (NISS), which he said, would reduce the accumulated debt profile and improve cash flow among operators.
“Upon full implementation and maturity of the NISS platform, it is expected that no less than 30 per cent of interconnect traffic will be settled through NISS, and this will result in cashflow improvement of over N5.4 billion per month,” Nnamani said.

The NISS platform, he added, would offer a high degree of accuracy in the settlement of interconnect bills. The call records from interconnect exchange operators, will be used to process the invoices and confirm payments due to each operator. For operators that decide to present traffic that has been exchanged directly, the processing at NISS will be used as the invoice amount and payment will be done based on this, he said.

He added that NISS would become as effective as the Nigeria Inter Bank Settlement System (NIBSS) in the banking sector, if well implemented.

“The NISS will also offer real-time visibility of the net cash positions and obligations of operators on a daily basis. This will enable the operators and their partner banks to plan ahead and ensure there is cash availability to meet their obligation when it becomes due, unlike the current situation where invoices are sent several months down the road and the obligation becomes too large to handle from the operators angle, resulting in disputes and inability to pay,” Nnamani said.

According to him, the concept of the operations of the current Interconnect Clearing Houses in the county is good, but its implementation is poor, hence Nigeria still records high volume of interconnect debts