NIGERIAN MOBILE OPERATORS REJECT INTERCONNECT CLEARING HOUSES DESPITE RISING DEBT

Telecoms

The determination of the Nigeria Communications Commission to mitigate the crisis of interconnect debt now plaguing the telecom industry with the licensing of Interconnect Exchanges has suffered a setback as operators refuse to sign up to them. Vanguard's investigations indicate that the major operators in the industry have refused to sign agreements with the Interconnect exchanges more than one year after they were licensed.

However, while the major operators such as Vmobile, MTN Nigeria, GloMobile and NITEL have not signed contracts with the Interconnect Exchanges at arms length, the small operators, especially PTOs have embraced the Exchanges and many of them have signed up.Amongst the telcos that have signed on the Exchanges as at the last count are Reltel, Intercellular, Cellcom, Mtel, and some Pre-paid callcard operators. Starcomms is already finalizing arrangements to sign on one of the Interconnect Exchanges. But while some operators are reluctant to sign on Interconnect operators, the networks that have engaged their services already have sweet stories to tell.

Keiran Enechi, Chief Marketing officer for Reltel says they the decision to sign on an Interconnect Clearing house has been very helpful to his company. He said that the company now helps it with billings with its interconnect partners, stressing that it has helped to streamline and harmonise his company's relationship with its partners. He said for instance that the company now has a seamless relationship with Mtel as the interconnect company has moved in to reconcile their billing when it is due. Enechi noted that most of the disputes in interconnect debt could easily be resolved with the work of interconnect clearing houses.

There are indications however that the mobile companies are reluctant to engage the services of Interconnect Exchanges because of the unresolved issue of interconnect rate for the market. The mobile companies are asking for an average of N16.50 interconnect rate with PTOs while the PTOs are asking for parity. MTN for instance is asking for N16.50 settlement for calls that come into their network from the PTOs while they say they are ready to pay PTOs N12.00 for calls that go from their networks into PTOs. Vmobile on the other hand is asking for interconnect settlement rate of N18.12 while Glo put its own rate at 18.00.

The interconnect indebtedness in the industry has resulted in the urgent calls for a review of interconnect rates in the past one year. The debt is put at over N20 billion with the bulk of the debt owed GSM operators. As at June 2005, Vmobile sais that between NITEL and other PTOs, it was owed more than N4.2 billion. Likewise, Engr. Mashi Managing Director of NITEL also says that NITEL is being owed more than N4.5 billion in interconnect debt as at June of the same year.

MTN, the network with the highest number of subscribers also claims it was owed close to N5 billion in interconnect debt by June last year. In almost all the cases, the stock of debt has further increased in the past six months. An official of Vmobile told Vanguard last week that most of the agreements brokered by the NCC for the debtor operators to pay up in instalements last year have become meaningless as most of them have reneged on such arrangements. More worrisome is that in most cases, the capitalisation of some of the companies is not up to 10% of their indebtedness making it a very bad case for the creditor networks. Fortunately, the business plan of some of the Interconnect operators include the settlement of Interconnect debt on behalf of subscribing networks through settlement arrangements with banks.

PTOs argue that the large stock of debt which is now threatening the industry is owed because of the disparity in the interconnect rate between PTOs and GSM operators. They are therefore asking for parity. But the mobile operators disagree, saying that they deploy more resources in delivering a call than PTOs.

Vanguard