Interswitch eyes Nigeria’s telecom market with MVNO license

Interswitch, the Visa-backed Nigerian payments giant, has secured a Tier 5 Mobile Virtual Network Operator (MVNO) license from the Nigeria Communications Commission (NCC) for a sum of ₦500 million ($1.08 million) in May 2023. This acquisition marks a significant pivot for Interswitch, as it ventures beyond its traditional payment services into the realm of telecommunications.

According to the company’s financial report, Interswitch intends to leverage this newly acquired license to pioneer a novel approach in the telecommunications market, merging payment and telecoms services tailored for both business-to-business (B2B) customers and consumers. By exploring a low-capital-expenditure virtual telecoms model, Interswitch aims to bridge the gap in underserved areas while simultaneously tapping into Nigeria’s vast phone market.

Nigeria, renowned as Africa’s largest phone market, operates a tiered system for awarding MVNO licenses, delineating the scope of services each tier can provide. Holding the highest tier license, Tier 5, Interswitch is poised to engage in negotiations with one of Nigeria’s four major telcos, enabling it to offer asset-light telecom services primarily in areas lacking adequate coverage.

Through strategic collaboration with its telco partner, Interswitch plans to utilise existing infrastructure to deliver value-added services to consumer segments traditionally overlooked by mainstream telcos. This initiative holds the promise of providing more affordable 4G or 5G services to Nigerians, while also addressing the pressing need for telecommunications access in rural communities.

The move comes at a crucial juncture for Nigeria’s telecommunications sector, which experienced its first decline in growth in five years due to a reduction in foreign investment and subsequent capital expenditure by existing telcos. In response, the NCC issued 25 MVNO licenses in 2023, aiming to inject fresh competition into the market and stimulate innovation.

Despite Nigeria’s burgeoning population of 200 million people, mobile connectivity remains elusive for a significant portion, with only 60% having access to basic services, less than 5% enjoying 4G connectivity, and a mere 0.8% accessing 5G networks. Interswitch, with its extensive customer base exceeding 50 million debit cards issued through Verve, is poised to disrupt the status quo and offer compelling alternatives in the telecommunications landscape.

However, to carve out a significant market share, Interswitch faces the challenge of delivering superior telecommunications services while carefully selecting the right telco partner. With an estimated 200 million subscribers in Nigeria’s mobile sector, competition is fierce, necessitating innovative communication strategies and value-added services to capture consumer interest.

As Interswitch embarks on this new frontier, all eyes are on how the payments giant will navigate the complexities of Nigeria’s telecommunications market and revolutionise connectivity for millions across the nation.

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