Diversify or decline: How Nigerian telcos are thinking about their income streams

On April 2, MTN Nigeria subscribers woke up to an unpleasant reality. A dispute between Nigerian banks and the telecom company over income from airtime sales had escalated into a full-blown war between the two groups. For every recharge card sold through a banking service—USSD, internet banking, ATM card or bank app—the telco collects 96% of the value of the recharge top-up while banks and payment aggregators (think Flutterwave, QuickTeller, OPay) earn 4%. MTN wanted to change this agreement by reducing the banks’ stake to 2.5%.

Banks, mainly commercial banks, resisted the change and dealt a striking blow by making it difficult for their customers to recharge MTN lines through bank services. That move disrupted the decade-long convenience of a simple digital recharge procedure. People scrambled. Many resorted to old practices such as peer-to-peer airtime recharge and buying paper airtime from MTN agents. Other banks, such as neobanks like Kuda