Unleashing possibilities for underserved areas and catering
to overlooked consumer segments, Interswitch aims to revolutionize Nigeria's
telecom sector, promising affordable 4G/5G services and innovative
communication solutions.
Interswitch, the Visa-backed Nigerian payments giant that
reported $42 million in revenue for its financial year ended March 31, will
enter into Nigeria’s telecommunications sector after acquiring a Tier 5 MVNO
(Mobile Virtual Network Operators) license for ₦500 million ($1.08 million)
from the Nigeria Communications Commission (NCC) 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,” read the
company’s financial report.
Nigeria, Africa’s largest phone market, awards MVNOs on a
tiered basis, specifying the services they can provide. Interswitch, which has
the highest tier licence—the Tier 5 (unified virtual operator) license— can
negotiate with one of Nigeria’s four telcos and provide asset-light telecom
services in underserved areas.
Last year, the country’s telco sector witnessed a decline in
growth—its first in 5 years— after foreign investment declined, which led to
reduced capital expenditure from Nigeria’s existing telcos.
The NCC issued 25 MNVO licenses in 2023 as it looked to
increase competition in Nigeria’s telco sector. Nigeria is home to 200 million
people, but only 60% of the population can access mobile connectivity, while
less than 5% have access to 4G, and 0.8% have access to 5G.
The payment startup would rely on its access to a large base
of customers—Interswitch, through Verve, has issued more than 50 million debit
cards—to offer an alternative to the entrenched options that Nigeria has in
telecommunications.
Interswitch would have to offer improved telecommunications
services to its customers and carefully select a telco to partner with it to
capture market share in Nigeria’s mobile sector, which is estimated to have
more than 200 million subscribers.
The payments startup would also have to introduce innovative
ways of communicating and value-added services if it hopes to compete in
Nigeria’s telco sector.
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