Interswitch, Nigeria’s FinTech top player is taking a giant stride in venturing into the telecommunication industry. This industry is filled with giants who have made a name for themselves by owning large customer databases.
Known for being a Visa-backed Nigerian payments giant, the FinTech giant boasts $42 million in revenue for its financial year that ends on March 31.
Interswitch has set its sights on venturing into the country’s dynamic telecommunications sector. This strategic move comes after the company successfully secured a Tier 5 Mobile Virtual Network Operators (MVNO) license, which was obtained from the Nigeria Communications Commission (NCC) at a significant investment ₦500 million an equivalent of one million, eighty thousand dollars ($1.08 million) in May 2023.
The acquisition of this coveted MVNO license marks a significant milestone for the company, paving the way for its entry into the mobile network services domain.
With this license in hand, Interswitch is set to introduce innovative telecommunication solutions that align with its commitment to enhancing connectivity, digital inclusion, and seamless communication experiences for Nigerians across diverse demographics.
The company’s financial report reads,
“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.”
Interswitch secured the Tier 5 MVNO license via its subsidiary, Systegra Technologies Limited, which operates as a licensed value-added service aggregation provider licensed by the NCC.
Systegra Technologies Limited boasts an array of services, encompassing SMS and USSD gateways, IVR portals, web and WAP solutions, gaming platforms, carrier billing services, mobile advertising avenues, and comprehensive consulting services.
Also Read: MTN’s Profit to Decline by 90% -No Thanks to Naira Devaluation
This new development means the Visa-backed payment company will be able to provide affordable 4G or 5G services to Nigerians or extend telecommunication services to rural areas.
Known as Africa’s largest phone market, Nigeria has implemented a structured MVNO system with different tiers specifying the range of services each tier can provide.
With this particular Tier 5 license, Interswitch will partner with one of Nigeria’s four prominent telecommunication giants, leveraging its infrastructure to offer value-added telecom services, especially in areas that are currently underserved.
This strategic move aims to enhance connectivity and accessibility across various regions in the country, contributing to the overall advancement of Nigeria’s telecommunications landscape.
Interswitch aims to make 4G and 5G services more affordable for people in rural areas, thereby addressing the significant gap in mobile connectivity.
What Does The Tier 5MVNO License Mean For Pre-Existing Telecommunication Companies And Users?
With the Tier 5 MVNO License issued to Interswitch, telecommunication users will be able to get easy and affordable access to 4G and 5G, especially in rural areas where telecommunication services are below manageable.
Amid Nigeria’s telecommunication sector experiencing a slowdown in growth, the introduction of the MVNO license is a total game changer for the industry. Tier 5 offers a distinctive service of a Unified Virtual Operator.
NCC started advertising Tier 5 MVNO in August 2022. An MVNO is referred to as a wireless communication service provider that resells mobile network services bought at wholesale prices from pre-existing Mobile Network Operators (MNO), such as 9mobile, Airtel, MTN, and Glo, for discounted amounts to end users and customers.
This means acquiring the license will require Interswitch to rely on these pre-existing telecommunication providers, while they end up becoming competitors.
The license which was issued at five hundred million Naira (₦500 million), an equivalent of one million, eighty thousand dollars ($1.08 million) proves that getting access to good network service in Nigeria seems to be a very expensive investment.
The MVNO License is valid for ten (10) years with an option to renew the license for another ten (10) years.
FinTech Telex recalls that In 2023, Nigeria’s telecommunication sector experienced a significant downturn in growth, marking its first decline in five years. This trend was attributed to a reduction in foreign investment, resulting in decreased capital expenditure from the country’s established telecommunications companies.
