New Telegraph

3.5Ghz: Optimising Nigeria’s spectrum resources for growth

With the recent successful auction of the 3.5GHz spectrum for 5G deployment, stakeholders have hailed the Nigerian Communications Commission for its efficient management of the country’s spectrum and how it has translated these scarce resources to revenue for the country. SAMSON AKINTARO reports

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. It is therefore instructive that stakeholders have expressed the view that the current leadership of the Nigerian Communications Commission (NCC) headed by Prof. Umar Garba Danbatta has been at the forefront of setting the pace in terms of ensuring effective returns to the nation through diligent sales and optimisation of spectrum resources, especially with respect to the recently-auctioned 3.5 gigahertz (Ghz) spectrum band for Fifth Generation (FG) 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.

Optimising spectrum usage

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 2020-2025. NNBP targets a broadband penetration of 70 per cent to reach 90 per cent of the population with 10Mbps Internet speed in the rural area and 25 megabits per second (Mbps) in urban areas, with the cost of one gigabyte (1GB) of Internet data reduced to N390 by end of implementation year, 2025. In Nigeria, the national regulatory authority for the telecommunications sector has also been overseeing the licensing of the 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 socioeconomic development, it has also put in place a ‘Use it, trade it or lose it’ model to prevent instances where a spectrum licence holder does not use it. Backed by the Spectrum Trading Guidelines 2018 developed by the Commission, a spectrum licence holder has the window of opportunity to sell such to any other operator willing to buy and deploy for service provisioning to Nigerians.

Track record of efficiency

Over the years, NCC has ensured effective management of these spectrum resources from the sales 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 covers both the operating licence and auction licence for the operators, a number of spectrum auctions had also been conducted by the Commission including the 2.3Ghz sold to Bitflux in 2014; the six slots of the 14 slots in the 2.6GHz spectrum licence sold to MTM in 2016, among others, none of which has fetched the Federal Government’s revenue as much as the 2001 auction did.

Successful 3.5GHz auction

However, industry watchers have observed that if the 2001 auction was considered a good deal for the country, the recently-conducted auction of 3.5 gigahertz (Ghz) spectrum for deployment of impending Fifth Generation (5G) network in the country, under Danbatta’s leadership as the Executive Vice Chairman (EVC) 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 exercise, but MTN and Mafab emerged as the winners of the two slots of spectrum bands offered for sale in the 2.GHz spectrum band. It was noteworthy that the auction winning price exceeded the reserve price target of $197.4 million and rose to an auction price of $273.6 million per slot (an increase of 38.6 per cent). The Commission also made additional revenue by proceeding to the spectrum assignment stage as a sequel to the successful sale of the spectrum bands at the Auction Stage. At the assignment stage, MTN Communications Nigeria Plc made an offer of $15.9 million ($15,900,000) for the assignment of a preferred Lot, while Mafab Communications Limited made an offer of $11.1 million ($11,120,000) for a preferred lot. Hence, MTN Communications Nigeria Plc, having made the highest offer was given the right to select its most preferred Lot and it selected Lot 1 (3500- 3600 MHz), while Lot 2 (3700- 3800 MHz) is consequentially assigned to Mafab Communications Limited at no extra cost. Considering that the amount is just the cost of the auction and not the operating license, which also brings another stream of revenue to the Government, analysts said the revenue 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, 2021, has further increased the revenue generation of the Commission to government coffers.

Unique auction

Meanwhile, it has been point-ed out that the 3.5Ghz spectrum auction was unique in a number of ways as due to the diligent measures emplaced by the Commission 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 EVC 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. It was also 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 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 held by the Commission using the available skills and resources in-house 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 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 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 that existing and respective investors have in the Nigerian telecoms sector, the growth of which is being sustained by the effective regulatory regime and friendly policies put in place by NCC and government respectively.

Last line

While industry sources have indicated that winners of the 3.5GHz spectrum have paid even before the February 24 deadline given to them, an official confirmation of this is being expected from NCC on or after the due date. The payment is expected to be remitted into the Consolidated Revenue Fund (CRF) of the Federal Government from where government would access the fund and deploy it into citizens- centric national projects that would help in boosting the socioeconomic transformation of the country.

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