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Interswitch, the Nigerian payments giant backed by Visa, achieved a revenue of $42 million for its financial year ending March 31. It is now venturing into Nigeria’s telecommunications sector with the acquisition of a Tier 5 Mobile Virtual Network Operator (MVNO) license from the Nigeria Communications Commission (NCC) for ₦500 million ($1.08 million) in May 2023.
According to the company’s financial report, it plans to explore a cost-effective virtual telecoms model using the acquired license, integrating payments and telecoms services for both B2B customers and consumers.
Nigeria, being Africa’s largest phone market, awards MVNO licenses on a tiered basis, outlining the services they are permitted to offer. With its Tier 5 license, Interswitch can collaborate with one of Nigeria’s four telcos to deliver asset-light telecom services in underserved areas, utilizing its partner’s infrastructure to provide value-added services to neglected consumer segments.
This license enables Interswitch to offer affordable 4G or 5G services to Nigerians and extend telecommunication services to rural regions. In 2022, Nigeria’s telco sector experienced its first decline in growth in five years due to decreased foreign investment, leading to reduced capital expenditure by existing telcos.
In response, the NCC issued 25 MVNO licenses in 2023 to enhance competition in Nigeria’s telco sector. Despite Nigeria’s population of 200 million, only 60% have access to mobile connectivity, with less than 5% accessing 4G and 0.8% accessing 5G.
Leveraging its extensive customer base—Interswitch has issued over 50 million debit cards through Verve—the payment startup aims to provide an alternative in telecommunications, targeting a significant share of Nigeria’s mobile subscriber base, estimated to exceed 200 million.
To succeed in Nigeria’s telco sector, Interswitch must deliver superior telecommunications services, select an appropriate telco partner, and introduce innovative communication methods and value-added services.
Source: Techcabal