By Chinenye Anuforo, [email protected]
In any telecoms market, certain resources are categorised as national resources, whose utilisation must be subject to government approval for the good of the citizens of the country.
It is, therefore, instructive that stakeholders have expressed the view that the leadership of the Nigerian Communications Commission (NCC), led by Prof. Umar Garba Danbatta, has been at the forefront of setting the pace in terms ensuring effective returns to the nation through diligent sale and optimisation of spectrum resources, especially with respect to the recently-auctioned 3.5 gigahertz (Ghz) spectrum band for Fifth Generation (5G) technology deployment in the country.
Resources such as right of way (RoW), numbering plan and, more importantly, frequency spectrum or radio resources used by telecoms licensees and other organisations for transmitting telecoms signals are major national resources that must be utilised for the good of the country and its citizens.
The need to ensure effective utilisation and optimisation of spectrum resources occupies a strategic implementation strategy for the achievement of the lofty targets in the Nigerian National Broadband Plan (NNBP) 2020-2025. The NNBP targets a broadband penetration of 70 per cent to reach 90 per cent of the population with 10 megabits per second (Mbps) Internet speed in rural areas and 25Mbps in urban areas; with the cost of 1 gigabyte (GB) of Internet data reduced to N390 by the end of implementation year 2025.
In Nigeria, the Nigerian Communications Commission (NCC) is the national regulatory authority for the telecommunications sector, which has also been overseeing the licensing of telecoms spectrum allocated to it from time to time by the National Frequency Management Council (NFMC), chaired by the Minister of Communications and Digital Economy.
While the commission licenses these spectrum bands to operators that will use them to deploy services to Nigerians for socio-economic development, it has also put in place a “Use it, trade it or lose it” clause to prevent instances where a spectrum licence holder does not utilise it. Backed by the Spectrum Trading Guidelines 2018, developed by the NCC, a spectrum licence holder has the window of opportunity to sell it to any other operator willing to buy and deploy for service to Nigerians.
Over the years, the NCC has ensured effective management of these spectrum resources, from the sale of the digital mobile licence (DML) of 2001, where MTN and Econet Wireless (now Airtel) paid $285 million each for the auction exercise conducted in January 2001.
Following the 2001 DML auction, whose bid price of $285 million covered the operating licence and auction licence for the operators, a number of spectrum auctions had also been conducted by the NCC, including the 2.3Ghz sold to Bitflux in 2014, and the six slots of the 14 slots in the 2.6GHz spectrum licence sold to MTN in 2016, among others, none of which has fetched the Federal Government revenue as much as the 2001 auction did.
However, industry watchers have observed that, if the 2001 auction was considered a good deal for the country, the recently-conducted auction of 3.5Ghz spectrum for deployment of 5G network in the country, under Danbatta’s leadership as the vice-chairman of NCC, has even brought greater value to the country as a whole.
In the successful and transparent auction, three qualified bidders, MTN, Airtel and Mafab, engaged in the competitive auction but MTN and Mafab emerged winners of the two slots of spectrum bands offered for sale.
It was noteworthy that auction winning price exceeded the reserve price target of $197.4 million and rose to $273.6 million per slot (up by 38.6 per cent).
The commission also made additional revenue by proceeding to the spectrum assignment stage after the successful sale of the spectrum bands at the auction stage. At the assignment stage, MTN Communications Nigeria Plc made an offer of $15,900,000 for the assignment of a preferred lot, while Mafab Communications Limited made an offer of $11,120,000 for a preferred lot.
Hence, MTN Communications Nigeria Plc, having made the highest offer, was given the right to select its preferred lot and it selected Lot 1 (3500-3600 MHz), “while Lot 2 (3700-3800 MHz) was assigned to Mafab Communications Limited at no extra cost,” Danbatta said.
Considering that the amount was just the cost of the auction and not operating licence, which would also bring another stream of revenue to the Federal Government, analysts aver that the revenue the NCC has made for the Federal Government is unprecedented in the history of the Nigerian telecoms industry since liberalisation in 2001.
According to them, the payment by MTN and Mafab on or before February 24, 2022, has further increased the revenue of the commission to the coffers of government.
Meanwhile, it has been pointed out that the 3.5Ghz spectrum auction was unique in a number of ways due to the diligent measures emplaced by the NCC, resulting in the successful auction of the spectrum band.
One of the measures taken by the Danbatta-led NCC was the timely and diligent constitution of an auction committee by the vice-chairman in June 2021, the subsequent development of a 5G policy document as well as the in-house developed Information Memorandum (IM) document for the auction of the 3.5 GHz spectrum band.
Also, it was gathered that the feat was achieved by the commission through the active support of the board and management of the commission to the auction committee members, including the members of the secretariat.
Based on the transparent nature of the auction, leveraging a credible software application by technical partners, the auction process has, in no small measure, placed the Commission and the country in general on the global arena for being the first country in Africa to have successfully conducted a 5G Auction in the C-band.
The auction was also the first auction held by the Commission using the available skills and resources in-house in the Commission without relying on external consultants. The effective and efficient rules used for the auction, as presented in the IM document, were developed fully in-house by the Commission’s inaugurated Auction committee members.
Not only this, the auction was the first major software-based auction conducted by the Commission and was the first time that an auction conducted by the Commission went up to 11 rounds, due to its competitive nature, ensuring that government get maximum value from the sales of the spectrum band.
It is also noteworthy that the auction has been adjudged to be highly transparent by all observers including the participant that did not win at the end. For instance, reacting to the auction exercise, the Group Chief Executive Offer of Airtel Africa, Segun Ogunsanya, whose Nigerian operation (Airtel Nigeria) did not win, commended the NCC ‘for a transparent 5G auction completed on December 13, 2021., adding that Airtel will continue to closely track the 5G ecosystem over the next several years, in particular the availability of affordable 5G devices and relevant use cases.
In addition, anti-corruption agency including the Independent Corrupt Practices and Other Related Offence Commission (ICPC) and other interest groups such as the Association of Licensed Telecom Operators of Nigeria (ALTON) and Association of Telecoms Companies of Nigeria (ATCON), among several other stakeholders invited to witness and monitor the auction process. The transparency of the auction was further boosted by the live broadcast of the process to the general public.
According to Danbatta, “the auction of the spectrum signals another marked digital revolution that will help in advancing the Federal Government’s quest to achieve a fully digitised economy for socio-economic development of the country.”
He added that the keen competition witnessed during the auction among the three qualified bidders was also symptomatic of the zeal, interest and confidence which existing and respective investors have in the Nigerian telecoms sector, the growth of which is being sustained by effective regulatory regime and friendly policies put in place by the NCC and government respectively.
Meanwhile, while there has been unconfirmed and speculative reports on the payment status of the winning bid price $173.6 billion and the assignment price by the two winners, MTN and Mafab, of the 3.5Ghz spectrum, Nigerians are waiting with baited breath to officially hear from the Commission if the licensees are able to meet up with the February 24, 2021 deadline set for them to make their payment to the Commission.
The payment, once paid would be remitted into the Consolidated Revenue Found (CRF) of the Federal Government from where the government will access the fund and deploy it into citizens-centric national projects that would help in boosting the socio-economic transformation of the country.