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MTN Nigeria in a Mobile Network-Sharing Agreement with 9Mobile

February 4, 2021

Nigeria’s market leading telecoms company MTN has entered into a network-sharing agreement with struggling rival 9Mobile and as a result both companies will request for Nigerian regulatory permission for an agreement to let customers share their networks, 9Mobile CEO Alan Sinfield was quoted as saying.

The companies have been running a pilot-free roaming scheme in Ondo State allowing customers of each company to switch to the network of the other where its own has no coverage has run smoothly, says Sinfield in Lagos. The pilot is the first of its kind. The facility has been provided at no extra charge and the companies will seek permission from the regulator for a full roaming agreement, he adds.

Free national and international roaming provision has been gaining ground in Africa. In 2014, East African Community countries agreed to create a single network area for five national economies, with mobile roaming charges eliminated. The move led to an immediate surge in traffic: according to the World Bank, inbound roaming calls to Kenya from Rwanda increased by over 950% when the change was introduced.

Six members of the Communauté Economique et Monétaire de l’Afrique Centrale agreed last year to end roaming charges by the start of this year. And since January 2020, people travelling in the Economic Community of West African States have been able to roam without paying charges. With a roaming agreement, there is no need for additional infrastructure to cover a gap in the network. So cash can be saved and used elsewhere.

The Nigerian Communications Commission has said that roaming agreements can help increase capital expenditure efficiency. It hopes the saved cash can be used to provide more infrastructure in unserved parts of the country. The industry “should be doing more to collaborate” to increase access, says Sinfield. “Collaboration is the way forward for a market of this size.”

MTN is Nigeria’s largest mobile company and 9Mobile, formerly known as Etisalat, is the fourth-largest, with 13m subscribers. That’s more than the entire market in Belgium, which had 11.5 million subscribers in 2019. Sinfield is confident the company can raise its subscriber total this year.

To stop the biggest companies from dominating, Sinfield is in favour of price floors being removed in combination with strict rules on the dominance of those larger businesses in the market. Penetration can increase faster if you “let the market determine the price” with regulatory controls to prevent the emergence of dominant companies, he says.

The need for cooperation extends to fibre-optic cables, says Sinfield. Companies “should not be digging up the same hole” one after another, and 9Mobile has agreements in place with its competitors to avoid this happening, he says. More active network-sharing is needed, he adds. “We still have a long way to go.”

The company plans to upgrade its network by investing in sites, servers and storage.This year’s expansion is covered by existing financing, says Sinfield. In August, 9Mobile secured a payment service bank licence from Nigeria’s central bank. 9PSB, a 9Mobile subsidiary, was launched at the end of November.

Sinfield sees “huge potential” in the 50 million to 60 million people who can open a bank account but don’t yet have one. 9PSB operates as an online retail bank that also uses agents in 9Mobile stores and other retail outlets. “We have far greater penetration than the banks do,” says Sinfield.

The unit plans to extend its reach by building a network of ATMs, which has already been started. 9PBS has plans to extend its product range. “Savings and insurance will be part of the roadmap.” 9Mobile is also looking for ways to bring more data services to the market, adds Sinfield. No one is big enough to go it alone in a market the size of Nigeria, with a population estimated at 201 million people by the World Bank in 2019.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Nigeria’s Central Bank Gives Approval for 9PSB to Commence Operations With *990#

August 31, 2020

The Central Bank of Nigeria has reiterated its commitments towards the deployment of fintech in actualizing financial inclusion goals across the country. This according to a source at the apex bank will help reduce the challenges customers continue to encounter such as regular long queues in the banking halls, consistent network towards the deployment of fintech in actualizing financial inclusion goals across the country. This according to a source at the apex bank will help reduce the challenges customers continue to encounter such as regular long queues in the banking halls, consistent network failure, stringent documentations to assess credit facilities, frequent transaction/dispensing error, delay in transaction completion and process among others.

To this end, the Central Bank of Nigeria has granted final approval to Nigeria’s lifestyle and first payment service bank, 9PSB (Payment Service Bank), to commence operations in fostering financial inclusion drive in the Nigerian ecosystem. It could be recalled that a survey conducted by the Enhancing Financial Innovation and Access (EFInA) a few years ago indicated that over 54 million Nigerians above the age of eighteen are either served by informal institutions or are totally unbanked. To get these people into the system requires well designed and targeted fintech deployment such as what 9PSB offers.

Speaking on the vision of 9PSB’s entrant into the Nigerian financial sector, the CEO of 9mobile, Mr. Alan Sinfield stated that there’s a huge potential in the market and 9PSB is strategically positioned to expand its operations into financial services. He stated that “We are happy to be the first Payment Service Bank to provide all Nigerians with access to banking services and open up a digital world of possibilities to improve everyday lives. We know that this new development will further improve the country and the people going forward. In 2018, 9mobile partnered with Nigerian bank, UBA to roll out 9Pay, a mobile payments solution while also pushing for a fintech license. We are delighted that we have now secured final approval for a Payment Service Bank.”

In his own reaction, the CFO of 9mobile, Mr. Phillips Oki stated that “the financial inclusion that 9PSB will provide will be an enabler to achieving unparalleled benefit in everyday transactions. The *990# allows Nigerians to perform all financial transactions including utilities payment from the comfort of their phones and homes on any mobile network at no charge. With a large network of agents strategically located in both urban and rural communities, 9PSB is going to make sending and receiving money possible, easier, seamless and less stressful for all Nigerians. 9PSB is also available on mobile App and internet banking for ease of banking and simplicity. Over the coming weeks 9PSB will unveil its products and services to Nigerians.”

9PSB will no doubt bring relief to all Nigerians. This is because Payment Service Banks facilitates sending remittances across the country from one user to another, bypassing the banks. Furthermore, 9PSB will reach the people at the bottom of the pyramid to facilitate financial inclusion especially in the rural setting and increase financial payment in Nigeria.

In October 2012, the CBN introduced the National Financial Inclusion Strategy (NFIS) to provide Payment Service Banks across Nigeria with the aim of breaking the traditional barrier preventing financial inclusion and promoting low cost, secure and convenient financial services across the country.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Nigerian Telco 9Mobile Turns To Banking With The Country’s First Ever Payment Service License

August 30, 2020

In Nigeria, 9mobile has changed everything about itself: from its name, which was previously Etisalat, and up to the point of who owns it. The telecom company’s latest strategic change has nothing to do with the industry in which it is currently playing — telecommunication. Two years after Nigeria’s central bank issued the Guidelines for the Licensing and Regulation of Payment Service Banks in Nigeria, 9mobile has become the country’s first ever company (through its subsidiary called 9PSB) to secure a payment service bank license, ahead of even fintechs who were often fingered whenever such a little-known banking style is mentioned. Joining 9mobile in the new licensing galore are Hope PSB, Moneymaster PSB.

“We are happy to be the first Payment Service Bank to provide all Nigerians with access to banking services and open up a digital world of possibilities to improve everyday lives. We know that this new development will further improve the country and the people going forward. In 2018, 9mobile partnered with Nigerian bank, UBA to roll out 9Pay, a mobile payments solution while also pushing for a fintech license. We are delighted that we have now secured finale approval for a Payment Service Bank,” the CEO of 9mobile, Mr. Alan Sinfield said.

Nigerian telecom market share, 2019. Source: Nigerian Communication Commission
Image for: 9mobile banking *in Nigeria*

A Deal Breaker, But The Stiffest Of Competition

9mobile is, however, not wasting any time with its new glory. After a chequered outing being a telephone communication company, in which it is still floundering for breaths, the company has quickly set the ball rolling with a new USSD code, signalling it has arrived, ready and fit to slug it out with existing well-capitalised commercial banks and the barely regulated fintechs. The code is *990#, and Nigerians will get a feel of it soon.

“The financial inclusion that 9PSB will provide will be an enabler to achieving unparalleled benefit in everyday transactions,” said the CFO of 9mobile, Mr. Phillips Oki. “The *990# allows Nigerians to perform all financial transactions including utilities payment from the comfort of their phones and homes on any mobile network at no charge.”

But then, 9mobile’s 9PSB will face an uphill task in the coming months. Although a recent survey conducted by the Enhancing Financial Innovation and Access (EFInA) in 2018 indicated that over 60% of Nigerians above the age of eighteen are totally unbanked, Nigeria is home to hundreds of financial services companies, competing, yet never completely capturing all of these unbanked people. For instance, even with over 500 branches and business offices in all states in Nigeria, Nigeria’s Zenith Bank Plc, one of the country’s largest banks by market cap (₦4.83 trillion as at 2017), and largest bank by customer deposit, still has less than 2 million accounts.

9mobile is, nevertheless, banking on its existing infrastructure to scale.

“With a large network of agents strategically located in both urban and rural communities,” said Oki, “9PSB is going to make sending and receiving money possible, easier, seamless and less stressful for all Nigerians. 9PSB is also available on mobile App and internet banking for ease of banking and simplicity. Over the coming weeks 9PSB will unveil its products and services to Nigerians.”

But this strategy too, it has no monopoly of. MTN, the country’s largest telco by market shares, has its own network of agents and mobile money services. Last year, MTN launched its mobile money service, MoMo, operations in Nigeria. Through the service, MoMo customers can send a text for free and get a response giving them a list of registered agents near them. The customers then transfer sums of money to the agents who in turn give them a code to be transmitted to the receiver. The receiver goes to an agent near them and collects the cash. Among the telecom companies, MTN is not alone. Glo, the first telco to be licensed as a super agent to carry out mobile money business in Nigeria, with its “Glo Xchange,” has outlets spread across the country where customers can visit to carry out mobile money transactions such as customer registration, cash –in, cash-out, airtime purchase, bill payments etc.

Fighting 9mobile in its new territory will, therefore, be a multitude of unregulated financial technology companies as well as traditional banks with large capitalization and telcos themselves.

The difference between different forms of formal banking services in Nigeria.
Image for: 9mobile banking in Nigeria

What Difference Will A Payment Service Bank License Make?

Although 9mobile pretty much will be replicating what most traditional banks are doing, one major difference is that unlike traditional banks, 9mobile’s 9PSB is not permitted under the regulation to give loans or any form of credit facilities to its customers. Another difference is that at least 50% of 9PSB’s services must be located in rural areas, and unlike most fintechs which operate (or piggyback on) microfinance banking only in permitted geographical territories, 9PSB’s operations are allowed nationally.

A Payment Service Bank (PSB) is a new category of bank with smaller scale operations and the absence of credit risk and foreign exchange operations. In addition to accounts (current and savings), PSBs can also offer payments and remittance services, issue debit and prepaid cards, deploy ATMs and other technology-enabled banking services. Think of them as basically stripped-down versions of traditional deposit money banks, with limited functionality and a focus on onboarding more of the excluded and marginalised population.

Under Nigerian central bank’s regulations, subsidiaries of mobile network operators (aka telcos), mobile money operators, retail chains (supermarkets) and banking agents are welcome to apply for the PSB license, provided they can meet certain requirements, including a 5 billion naira ($12million) capital base, and a combined 2.5 million naira ($6.4k) application and license fee (which are non-refundable).

9mobile ’s new banking license is coming after the CBN issued an updated and revised guideline for the licensing and regulation of Payment Service Banks in Nigeria on August 27, 2020. The telco is not the largest in the West African country. MTN has the largest chunk of the market with over 74 million subscribers, followed by India’s Airtel with over 52 million users; locally owned Glo at 52 million; and then 9mobile with a meager 12 million users. Visaphone (which is merely an extension of MTN, having being acquired by the telecom giant in 2015 to boost its 4G capacity) comes last with just a little over 137, 000 users.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer