N42 Billion USSD Debt: MTN Seeks Settlement from Nigerian Banks

MTN Nigeria Communications Plc has disclosed a significant outstanding debt of N42 billion owed by deposit money banks (DMBs) in Nigeria for Unstructured Supplementary Service Data (USSD) services provided.

Despite navigating a challenging financial landscape amidst recent macroeconomic uncertainties, telecommunications leader MTN Nigeria Communications Plc disclosed this significant debt in its audited 2024 financial statements.

The total USSD service debts directed by the Central Bank of Nigeria (CBN) and Nigerian Communications Commission (NCC) to banks to pay MTN amount to N74 billion, the report showed.

A review of the report reveals that as of December 31, 2024, MTN Nigeria Communications Plc had received payments totaling N32 billion, leaving a significant outstanding balance of N42 billion, which was recognized as debt for the year under review.
“We’re pleased to announce that, thanks to the timely intervention of our regulators, the uncertainty surrounding our outstanding USSD debt recovery has been successfully resolved. This resolution has enabled us to recognize a significant revenue of approximately N74 billion.”

“As of December 2024, approximately 34 per cent had been repaid, and the remaining balance was recognised as receivables, which are expected to be settled in 2025,” MTN Nigeria chief executive officer, Karl Toriola, said in a statement on Friday, February 28.

“Additionally, the recognition of USSD revenue contributed significantly to the company’s financial performance, with service revenue increasing by 35.9% to N3.3 trillion, marking a substantial improvement in the company’s top-line growth.”

The USSD debt obligation has been a concern to MTN and other telecommunications companies.
According to our findings, Unstructured Supplementary Service Data (USSD) is a communication service that enables users to interact with a mobile network operator’s computer system, typically incurring a transaction fee charged by the service provider.
It is one of the tariffs the NCC recently hiked following mounted pressures from the telecommunications companies.

In October of last year, MTN’s CEO, Karl Toriola, warned that the company might be forced to suspend its operations in Nigeria if the current tariff regime was not revised upwards.
“His warning was issued against the backdrop of the company’s dismal financial results and a significant negative equity balance, which had raised concerns about MTN’s long-term sustainability.”

“There should be no delusion; if the tariff doesn’t go up, we will shut down,” Toriola said, maintaining at the time that MTN might suspend the USSD banking services due to the N250 billion debt owed by Nigerian banks.
In previous reports, The Abuja Post has highlighted the concerns raised by mobile network operators regarding the significant USSD debt owed by banks, and their subsequent requests to regulatory authorities for permission to suspend support services until the outstanding debts were settled.

The operators have also sought for upward adjustment of tariffs to reflect the economic realities which was recently approved by a 50 per cent.

According to MTN Nigeria’s 2024 audited financial statements, the company incurred a significant loss after tax of N400.44 billion, representing a substantial increase from the N137.02 billion loss recorded in 2023.
Its financial position shows a negative equity of N458.01 billion, which also widened from N40.84 billion.

A negative equity balance means that MTN Nigeria is in debt and may be unable to pay its creditors as its total liabilities of N4.65 trillion exceeded its total assets of N4.196 trillion as of December 2024.

“Due to the significant losses incurred, which were largely attributed to currency devaluation and its subsequent impact on retained earnings, the company’s directors have determined that a final dividend payment to shareholders is not feasible at this time.

Despite the challenging environment, MTN Nigeria remains committed to adapting to emerging market trends and regulatory developments, ensuring the company stays resilient and responsive to the uncertainties ahead.”

According to Karl Toriola, “We’ve achieved substantial milestones in our efforts to fortify our capital position. Notably, we’ve successfully renegotiated our tower contracts, secured approval for tariff adjustments, and made significant headway in mitigating foreign exchange exposure. These strategic initiatives will facilitate margin recovery and pave the way for restoring our capital position.