Kelvin Bowoto
Interswitch, a Visa-backed Nigerian payments company with $42 million in revenue for the fiscal year ended March 31, will enter the Nigerian telecommunications sector by acquiring a Tier 5 MVNO license from the Nigeria Communications Commission (NCC) for ₦500 million ($1.08 million) in May 2023.
“The company is investigating the launch of a low level of capital expenditure virtual telecoms model using the license, combining payments and telecoms services to B2B customers and consumers,” according to the company’s annual report.
Nigeria, Africa’s largest phone market, awards MVNOs tiers based on the services they can offer. Interswitch, which possesses the highest tier license—the Tier 5 (unified virtual operator) license—can negotiate with one of Nigeria’s four telcos to provide asset-light telecom services in underserved areas.
Interswitch will use the infrastructure of its telco partner to provide value-added services to customer categories that have hitherto been overlooked or underserved by telcos.
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Interswitch can use this license to deliver cheaper 4G or 5G services to Nigerians, as well as telecommunications services in rural areas.
Last year, the country’s telecom sector had its first decrease in growth in five years as foreign investment fell, resulting in lower capital spending by Nigeria’s existing telcos.
In 2023, the NCC issued 25 MNVO licenses in an effort to increase competition in Nigeria’s telco sector. Nigeria has a population of 200 million people, yet only 60% of them have access to mobile connectivity, with fewer than 5% having 4G and 0.8% having 5G.
The payment company would rely on its access to a large client base—Interswitch, through Verve, has issued more than 50 million debit cards—to provide an alternative to Nigeria’s established telecommunications choices.
To grab market share in Nigeria’s mobile industry, which is anticipated to have more than 200 million subscribers, Interswitch would need to improve telecom services for its clients and carefully select a telco partner.
If the payments company wants to compete in Nigeria’s telco market, it will need to provide creative communication methods and value-added services as well.
Techrectory with Agency Report.
