Telcos fret over regulatory sanctions

The fear of regulatory sanctions and possible rise in bad debts arising from extending airtime and data credits to customers might have necessitated the suspension of the credit window by Nigeria’s mobile network operators (MNOs).

Industry sources yesterday said the suspension was due to concerns over interpretations of new regulations as operators were wary of any clash with regulatory authorities.

MTN Nigeria had at the weekend announced the temporary suspension of its popular airtime and data credit service, Xtratime, in a move it said was to comply with new consumer lending regulations introduced by Nigerian authorities.

The decision, the telco disclosed in a corporate filing with the Nigerian Exchange (NGX), followed the implementation of the Digital, Electronic, Online, or Non-Traditional (DEON) Consumer Lending Regulations, 2025, rules designed to tighten oversight and ensure transparency in digital credit services.

Xtratime, widely used by millions of subscribers, allows customers to borrow airtime or data and repay on their next recharge. However, the new framework now requires companies offering such services to meet stricter licensing and compliance standards.

Company Secretary at MTN Nigeria, Uto Ukpanah, however said the suspension was temporary and necessary to align its operations with the updated regulatory requirements.

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Despite pausing the service, its reassured customers that the alternative channels for purchasing airtime and data, including banking apps and USSD platforms, remain fully operational.

The company also sought to calm investor concerns, stating that the suspension is unlikely to significantly affect its financial performance, given the relatively small contribution of Xtratime to its overall revenue.

Airtel Nigeria had followed suit, assuring customers that customers will continue to enjoy uninterrupted access to airtime and data purchases through its existing channels.

Like MTN, Airtel also indicated that the temporary suspension is not expected to have a material impact on its service standards across the country.

Commenting on the development, Airtel Nigeria Director of Marketing Ismail Adeshina, said: “This is a necessary and responsible step as we align our operations with evolving requirements. Airtel Nigeria remains committed to the highest standards of compliance, transparency, and consumer protection, while continuing to innovate responsibly within Nigeria’s digital ecosystem.”

The company added that it will provide updates on the status of the service in due course.

Reacting to the development at the weekend, sources within the industry said the telcos were not interested in any regulatory confrontation that will hurt their business.

“The operators are wary of anything that will draw them into battles with regulatory agencies in the country. Recall the two companies that quickly suspended the credit services are listed on the NGX and are answerable to their shareholders. Remember too that in October 2015, the Nigerian Communications Commission (NCC) slammed MTN Nigeria a N1.04 trillion ($5.2 billion) fine for failing to disconnect 5.2 million unregistered subscriber identity module (SIM) cards on its network, a major breach of security regulations. The initial fine of N1.04 trillion was calculated at N200,000 per unregistered SIM card which all the operators, including MTN had willingly acquiesced to,” the source said, adding that after negotiations, including diplomatic shuttles,  to avoid crippling the business, the fine was reduced to N330 billion ($1.7 billion at the time), including requirements for MTN to apologize and list on the Nigerian Stock Exchange (NSE).

While MTN faced the largest penalty, other operators (Airtel, Globacom, and Etisalat) were also previously sanctioned for similar, smaller violations.

DEON Consumer Lending Regulations which went into effect on September 3, 2025 provide a comprehensive legal framework for digital lending to address consumer complaints regarding harassment, data breaches, and unethical loan recovery practices.

Violations can result in penalties of up to N100 million or one per cent of annual turnover, with potential for director disqualification.

“So, it is better to err on the side of the law,” the source added.

A telecom consumer advocacy group, Association of Telephone, Cable Tv and Internet Subscribers of Nigeria (ATCIS-Nigeria) has lauded the idea, saying it will end the era of exploitative interest charged for accessing those facilities.

Its National President, Hon Sina Bilesanmi, also said bad debts arising from the inability of the telcos to recover its loans to customers may have also been responsible for the decision.

“We welcome the FCPC’s intervention since it is on the side of the consumers. Some of our members alleged that they are charged 25 per cent on N100 borrowed. That is exploitative. Then, we hear on very good authority that when customers borrow so much and they are unable to pay, they just dump the SIM card, get a new one at practically little or no cost, register the cards and move on with their lives,” Bilesanmi said.

The FCCPC has denied shutting down or banning airtime borrowing, including data advance services in the country.

Director, Corporate Affairs, Ondaje Ijagwu, said the Commission has not prohibited airtime borrowing or data advance services, and no directive was issued preventing consumers from accessing lawful telecom value-added services.

“Following a deluge of consumer complaints bordering on opaque charges, unexplained deductions, aggressive recovery practices, poor disclosure standards, and inadequate accountability in segments of the digital lending and advance-services market, the Federal Competition and Consumer Protection Commission issued the DEON Consumer Lending Regulations in July 2025.

“The Regulations were introduced, among other reasons, to curb the excesses of abusive service providers whose practices had generated persistent consumer harm and undermined confidence in the market.

The primary aim is to promote a fairer and more transparent system by mandating proper registration, responsible lending conduct, clear disclosure of fees and terms, accessible consumer complaint channels, data protection safeguards, stronger accountability for third-party partners, and effective regulatory oversight.

“In the telecom sector, our findings indicated that some operators engaged in exclusionary third-party technical arrangements in clear disobedience to the provisions of the Federal Competition and Consumer Protection Act, 2018.

The Regulations sought to unlock the market to allow local participants alongside foreign partners, in line with free market principles.

 “These measures benefit Nigerians by reducing abusive practices, improving transparency, strengthening consumer choice, and encouraging responsible innovation by legitimate operators.

“We are aware that some vested interests and their foreign collaborators are opposed to the creation of safe markets and fair competition, therefore resorting to a campaign of disinformation”.

Ijagwu noted that operators are expected to structure their commercial relationships in a manner consistent with Nigerian law. Commercial arrangements or outsourcing decisions do not displace competition and consumer protection obligations.

At the commencement of the framework in July 2025, affected operators were granted an initial 90-day compliance period to regularise their products, structures, and operations.

That opportunity was not utilised within the prescribed time frame, specifically in the telecom sector. The compliance window was subsequently extended until January 5, 2026, providing additional time for alignment with applicable requirements. Despite that further extension, the necessary compliance steps were still not completed by the relevant operators.

Notwithstanding clear regulatory requirements, some operators chose to maintain the status quo by failing to register and regularise their services. In doing so, they continued operating monopolistic models that had long generated consumer complaints, including concerns relating to transparency, deductions, charges, and accountability.

Any temporary suspension, restriction, or operational change introduced by service providers should therefore be understood as a business or compliance decision by those operators, not a ban imposed by the FCCPC.

“It is inaccurate to attribute avoidable disruption to regulation where regulated entities had adequate notice and sufficient opportunity to comply. Attempts to misrepresent temporary service inconvenience as the result of lawful consumer regulation are mischievous. Nigerians deserve accurate information, not sensational claims. Consumers and members of the public are advised to disregard false and misleading narratives on this issue.

The FCCPC is fully committed to protecting consumers, promoting fair competition, encouraging responsible innovation, ensuring transparent digital financial practices, and working constructively with sector regulators and service providers in the public interest.