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As race to 5G network deployment begins

By Adeyemi Adepetun
22 December 2021   |   4:15 am
The successful auction of the 3.5GHz spectrum for the deployment of Fifth-Generation (5G) network has opened a new chapter in Nigeria’s telecoms industry.

The successful auction of the 3.5GHz spectrum for the deployment of Fifth-Generation (5G) network has opened a new chapter in Nigeria’s telecoms industry. Coming at a time the country is celebrating 20 years of telecoms revolution. ADEYEMI ADEPETUN, in this report, examines the process and possible revolution the deployment may bring.

The 3.5GHz spectrum auction for the Fifth-Generation (5G) network deployment has paved the way for improved telecommunications service, most especially broadband deployment in Nigeria.

The auction might have equally positioned Nigeria, among the countries that are ready for the next revolution in the global telecoms space.

For emphasis, 5G is the advanced form of 2G, 3G and 4G, which Nigeria currently operates. Large numbers of advanced countries of the world have adopted the 5G network, while others are considering its adoption in the next few years, because of its high connectivity speed that will drive new technologies like Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoTs), among others.

5G is designed to be a system that will bring flexibility to mobile, fixed and broadcast networks and support more extensive data requirements. The technology will impact the way interactions are done by enabling in some cases, unforeseen business models, enhanced lifestyles all resulting in increased productivity.

Globally, 5G is expected to be the fastest deployed mobile communication technology in history and is forecast to cover about 60 per cent of the world’s population in 2026.

At the end of 2020, 4G accounted for around 15 per cent of subscriptions in sub-Saharan Africa while 3G was still the biggest portion at 43 per cent, followed by 2G at just under 42 percent.

Nigeria’s 3.5GHzspectrum auction
As Nigeria moved to play on the global stage, an auction for a 5G licence was conducted. Adopting the ascending clock system, the auction was held on December 13 at the Transcorp Hilton hotel, Abuja and conducted by the Nigerian Communications Commission (NCC) in collaboration with the Federal Ministry of Communications and Digital Economy.

The process threw up two winners at the 11th round. The emerging winners were MTN, and new entrant, Mafab Communications, who won the licence at a bid price of $273.6 million each, as against the initial $197.4 million reserve price. Airtel, which happened to be the third preferred bidder, lost out at $270 million. The telecommunications firm, however, described the auction process as transparent.

At the end of the main auction process, where MTN and Mafab Communications emerged, both winners had to enter into another stage of bidding called the Assignment Stage, to determine, which of the winners would get the first lot and second lot, from the two available lots respectively.

During the Assignment Stage, MTN paid additional $15, 900,000 to get lot one of the spectrum, while Mafab paid extra $11, 120, 000 to get lot two.

Announcing the auction result, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, said provisional licences would be given to Mafab Communications Limited and MTN Nigeria, aswinners of the two lots in the 3.5GHz spectrum licence.

Danbatta explained that the two winners entered into another stage of auction called the Assignment Stage, in order to determine the operator that would take a particular lot out of the two lots that were auctioned. He said the winners would pay the full licence fee by February 24, 2022, and that the payment must be made in Naira denomination.

Before the bidding commenced, the Auction Manager, who is the Director of Spectrum Administration at NCC, Oluwatoyin Asaju, assigned each of the three bidders to their bidding rooms, and accredited one representative from each of the bidding operators as monitoring agent.

MTN Nigeria Plc was assigned bidding room two and monitoring room three, Airtel Networks was assigned bidding room three and monitoring room one, while Mafab Communications was assigned to bidding room one and monitoring room two.

For transparency, the bidding process was transmitted real time to two broad screens located at a general location inside Transcorp Hotel, where observers were seated.

According to Asaju, the first round of bidding was mandatory for all the three bidders and each bidder was at liberty to exit bidding at any of the bidding rounds. The initial rounds were allotted 20 minutes as a duration period for each round.

The bidding tussle
A chronology of the bid showed that bidding started when the commission placed the reserve price per lot at $197,400,000 as contained in the final Information Memorandum (IM).

At the venue, round one kicked off at $199,374,000.00; round two started at $201, 367,740.00; and round three started at $204,388,256.10; round four was at $209,497,962.50; round five started at $215, 782,901.38; round six started at $224,414,217.43; round seven started at $231,146,643.96; round eight started at $240,392,509.71; round nine started at $251, 210, 172,65; round 10 started at $263, 017,050.00.

The main stage auction eventually ended at about 7.22 pm which was round 11, with a final winning bid price of$273,600,000 ($273.6 million).

The bid process was supervised by officials of the DSS, ICPC and observed by officials of the Association of Telecommunications Companies of Nigeria (ATCON) and Association of Licenced Telecommunications Companies of Nigeria (ALTON), and other telecoms stakeholders.

The Mafab shocker
The dark horse, Mafab gave MTN and Airtel a run for their money. Mafab’s relentlessness to go the distance in the auction made Airtel Nigeria to apply for the Exit Bid at $270 million and drop off the race. Industry insiders claimed that Mafab means business and it is already in high level discussions with international gear makers such as Huawei and ZTE about its 5G business plan.

Mafab, whose chairman is Kano State billionaire, Alhaji Musbau Mohammad Bashir, has its head office in Lagos. The firm was incorporated on July 8, 2020 and licenced by the NCC to provide and operate local interconnect and international carrier services. It operate sunder three licences: Interconnect Data Exchange (IDE); International Data Access (IDA) and Value Added Service (VAS).

Bashir, an engineer, is the chairman of Althani Group of Companies with diverse interests across the oil and gas, banking, insurance, real estate and telecoms industries is also a director on the Board of Jaiz Bank Plc, Bento Drill Nigeria Limited, Offshore Technologies International Limited, and Resource Capital Group. Alhaji Bashir worked with Hammad Development Facilities and Jadai Diversified Services.

Expected impact and challenges
Challenges including erratic power supply, inability of operators to access foreign exchange, vandalism, Right of Way (RoW) are likely to confront5G deployment in the country.

The Global System for Mobile telecommunications Association (GSMA), the global body for telecoms operators and vendors, while referring to the New National Broadband Plan 2020 to 2025,disclosed that 5G roll-out for top 10 cities in Nigeria would require an estimated 6000 base stations to be deployed at a cost of up to $500 million.

But stakeholders are worried that if access to forex is restricted, 5G network deployment in the country would suffer.

The Managing Director/Chief Executive Officer of VDT Communications, Biodun Omoniyi, said the industry was import- dependent; thus, the need for special forex intervention.

But despite this, the final Information Memorandum (IM) stated that the 5G auction comes with a 10-yearspectrum licence and a minimum requirement of an operational Universal Access Service Licence (UASL).

According to the document, “where a winner does not hold a Unified Access Service Licence (UASL) which is the operational licence for the frequency spectrum slated for auction, it will be issued at an additional fee of N374, 600,000.00 only or at the subsisting licence fee at the time of the auction.”

The 5G eventual licensees will have a rollout obligation plan spanning a period of 10 years, beginning from the date of award of the licence. Between the first and second year of the licence, the operators are expected to roll out service in, at least, one state in each geo-political zone.

From the third to fifth year, they are obligated to cover all the zones. Between six to 10 years, they should cover all the states in the country, according to guidelines set out in the IM. The spectrum lot won by each bidder will be assigned on a nationwide basis covering all the 36 states of the federation and the Federal Capital Territory (FCT) on a subsisting policy on “use-it or lose-it” with respect to the use of assigned Spectrum.