‘MTN needs Visafone’s 800MHz to expand services in Nigeria’
Tobechukwu Okigbo is the Corporate Relations Executive of MTN. Okigbo joined the firm in 2017 from Smile Communications where he was the Chief Corporate Services Officer. With close to 30 years professional experience in the legal and telecommunication sectors, Okigbo is a lawyer and an alumnus of the University of Maiduguri as well as the University of Liverpool, England.
In this interview with ADEYEMI ADEPETUN, he spoke on efforts to move the industry forward and how the acquisition of Visafone’s 800MHz spectrum would aid the deployment of broadband infrastructure in the country.
What is the status of MTN Visafone transaction?
Currently, what has happened is that there had been a public hearing by the Nigerian Communications Commission (NCC) on the matter and last week, the commission published a report of the public hearing. In other words, what they did was that everything discussed at the hearing were itemised in the report and they put it on their website. So they are in the decision making process now.
Going by the several oppositions of the spectrum transfer and license, what would you expect NCC to do?
Let me start by saying that the issue of total ownership has been rested. MTN totally owns Visafone and the 800MHz spectrum. The question is whether the 800MHz should be allowed to be used by current MTN subscribers. Let’s not be in doubt about that. MTN already owns Visafone 100 per cent including the spectrum. It is the use of the license that is the issue.
Frankly speaking, I wouldn’t like to second guess the commission. It won’t be fair. But if you ask what I will like to be the preferred outcome? That, I can speak to.
Naturally, what I would like the NCC to do is to give MTN access to the 800MHz, because it is easier to deploy resources and make the investment case. It immediately adds value not just to MTN, but to the country as a whole.
With the 800MHz, how would MTN put it to maximal use?
To understand all that we have been saying around the 800MHz in simple terms is to understand the value of spectrum itself. So, where spectrum is in sub 1GHz, I mean the lower the spectrum bands, the better the propagation capabilities because every spectrum has its limitations. Let me explain it this way, if you have a one kilometre square piece of area and you are deploying spectrum on the 2.1GHz, if you need 10 Base Stations (BTS) to cover that space optimally, with 800MHz spectrum, you will probably need four (BTS). What it means therefore is that you can achieve better coverage; you can reach more people and provide services at a lower cost. So, if MTN has access to the 800MHz, it means that it would be able to invest and ensure that broadband reaches more people in Nigeria. The 2018 broadband penetration target is 30 per cent but only 22 per cent penetration has been achieved at this time. In 2017, broadband penetration grew by only one per cent, which seems to speak to the fact that there may have been a reduction in investments in the sector. If you recall, when NCC put 2.6GHz in the market, which is also broadband spectrum but does not have the propagation capabilities of the 800MHz, MTN was the only firm that invested. This is because the process speaks to MTN broadband strategy going forward. It speaks to the need to cover the country as much as possible and provide services in all areas. Other operators did not invest. To bring another issue to the table, if you remember the whole story around 700MHz, which is also sub-1GHz spectrum, all the adventure into that space was also towards ensuring availability of spectrum for converged services. The idea being that we know that the future of telecommunications is data. If you ask yourself or look at the way you communicate today, the extent to which the OTT services are used as opposed to the traditional voice services to the much more rich media that you can access or do with communication when you have access to broadband, you will discover that the only way to provide these services is to invest in spectrum which is required to deliver the services. What MTN has tried to do and continues to do is to future- proof itself by watching market developments and trends and then ensure that it is positioned to play in the fast developing telecommunications market.
Other operators are claiming that MTN having access to the 800MHz would stifle them out of business, what is your take on this?
This is a conversation around competition and dominance. In 2013, following a study, NCC found MTN, dominant in the retail mobile voice market. This is very important because we need to understand that there are different markets in the telecommunications industry. What you do in communications when you are regulating is that you identify and segment relevant markets and they are looked at separately to ascertain the level of competition in each relevant market. So, you have voice, leased line, downstream/last mile services and data services etc. MTN was found dominant in the retail mobile voice market. It was found jointly dominant with Globacom in the wholesale leased line & transmission capacity markets. MTN was however not found dominant in the mobile data services market which is the market relevant to the spectrum resources in question. In actual fact, the conclusion of NCC that time was that the mobile data market was “effectively competitive” and therefore no operator was declared dominant. Now, when organisations say MTN will become dominant, this is futuristic. They are saying that if MTN is allowed to use the 800MHz it might go on and become dominant. However, looking at it critically, we are a communications company and one of the most important resources in communications is spectrum. Every telecommunications company that is committed to any area that it operates would always look for an opportunity to acquire spectrum for the simple reason that spectrum is the basic resource needed to do the business. Now, what MTN has done is to strategically focus and try to acquire spectrum knowing, like everybody does that data is the next big thing. It is the only thing on the table going forward, especially when you talk about Internet of Things, convergence and all others.
Now, in looking at our position and what we should do, Visafone was on the table and its spectrum was not one assigned to MTN by NCC and I think we need to establish that fact. It was a function of somebody wanted to sell and another person was ready to buy. It was never a question where it was only made available to MTN to acquire. In actual fact, it would appear that even before speaking to MTN, Visafone had spoken to other operators, but they were not willing to commit resources, but MTN was. Assuming the spectrum was available and the Commission approaches only MTN and says come and take this spectrum, one can then posit that MTN may have been given an undue advantage. However, if the commission had the 800MHz and they were conducting an auction and they put out the spectrum and MTN comes, bids and gets it. If you didn’t show up for bidding, can you later turn around to say MTN should not have it because they will become dominant? How do we explain that argument? In this case, Visafone was available for any interested party to buy, MTNN did. Similar to how it participated in the 2.6GHz auction. It is unfair to now say that MTN should be prevented from having access to what it acquired fairly.
For me, it is about which company is committed to this environment? Who believes that it makes business sense to operate here? Who thinks that they want to invest in Nigeria? These are the questions.
For me, let’s look at it from this perspective; is MTN the biggest operator in the world? Some of the operators who raised concerns about MTNs access to the 800MHz spectrum are bigger than MTN globally and incidentally refused to participate in the 2.6GHz spectrum auction. Would you think that if they are committed to Nigeria, that they cannot for example, buy Visafone or bid for 2.6MHz? Now, not having invested in those resources; speaking from a pedestrian point of view, is it fair that the person who has shown commitment and invested should not be allowed to have it? Is it proper to limit another willing investor’s desire to invest simply because another player in the industry is not willing to invest? These are important questions that need to be answered. If the Commission in line with its powers under the Nigerian Communication Act of 2003 secures additional broadband spectrum and puts it up for auction, will it be fair to ask that an operator be denied the opportunity to participate when you are not willing to buy? That is one question. But then, even if there are genuine concerns about the potential dominance in the retail mobile data market, it is important to ask if the Commission has done anything between 2013 and now to ensure that the market remains competitive by ensuring that competition is not lessened or no operator has control of essential network facilities to the detriment of others? Obviously the answer is yes and it is important to speak to some of these interventions by the Commission. However, before we speak to the specific initiatives that the Commission has undertaken, it is important to look at the market and understand how it has evolved over the last 17 years. We were all here when we started, when to buy a SIM card was N20, 000, no matter how it came, we all remembered the argument about it and all that.
We all know that the price of telecommunications has continued to go down and we are also aware that every single factor of production for communication continues to go up. Look at 1999 and the price of diesel which is about 60 per cent of the cost of providing communications services and we could remember that this is a field where a significant portion of the input for production is denominated in dollars. Look at what the exchange rate was in 1999 and what it is today, bearing in mind that every single telecommunications company earns in naira not in dollar; yet the prices have gone down due to competition. In other words, one can say the market is competitive. Has one organisation done better than the others? Yes, we have to be factual and admit it, but why is that? It is because the organization is Pan Africa, focused on Africa. You will recall that just recently, MTN sold its only European operation in Cyprus to focus on other key markets, which is Africa. As we speak, the focus of MTN is Africa and Nigeria is a very key market, a priority one for that matter and we are committed to investments in our country.
Now following the 2013 Dominance Determination where MTN and GLO were found jointly dominant in the Wholesale Leased Line & Transmission Capacity Markets, the Commission commissioned a cost study on leased lines which led to the imposition of Price caps on wholesale leased line services. The price cap in essence ensures that no operator can obtain more than a fair return on its leased fibre lines. This intervention further ensures that competition in the leased line and transmission capacity market is in no way lessened as all operators will be in a position to access each other’s fibre at a fair price. It is important to note that MTN shares fibre with anybody that is interested. Incidentally, the organizations that spoke against MTN at the public hearing, lease fibre from us while we in return lease from them. This means that the key factors of production that MTN has more of and can decide not to share, it is sharing it without hassles. Where is the lessening of competition or the control of essential facilities to the detriment of others?
Speaking to access to spectrum resources, the Commission recently released Spectrum Trading Guidelines. Under that guideline, organizations can trade in spectrum as a secondary market has been created. In the secondary market that has been created, operators can either transfer lease or share spectrum resources. This secondary spectrum market hitherto did not exist and limited the ability of operators in entering spectrum deals beneficial to their business interests. If we take the 800MHz band as an example, where there are three 2x10MHz slots; one of which is with MTN following its acquisition of Visafone, this leaves the last two slots with Smile and Intercellular. The guidelines now empower other operators to commence spectrum trade conversations with Smile and Intercellular on their assigned 800MHz spectrum bands and even with other operators inclusive of MTN on spectrum bands that can be deployed for broadband services. Therefore statements which allude to MTN being the only organization with access to 800MHz is wrong. The same market MTN went to, others can also go to. I think we should be looking at the bigger picture of what Nigeria and the telecommunications consumer need. We can jumpstart this economy to most especially ensure the 30 per cent broadband target met. Communication is a social overhead capital and is one of the most important things that have helped every other sectors’ development. So, organizations that are willing to invest and who have continued to show commitment to the country and its economy should not be limited from supporting the Federal Governments broadband objectives.
Lastly, it is important to add that NCC most times checks and scrutinizes whatever products MTN is bringing to the market even much more than they do for others. NCC is a strong regulator, which other regulators from Africa and across the world come to study. MTNN will never be allowed to undertake actions that will lessen competition. Not by this NCC. There is therefore no need to shortchange ourselves as a nation when there is somebody ready and willing to make the necessary investment we need.
Should NCC fail to allow MTN have access to the 800MHz, what will be the impact?
The immediate impact is that Nigeria might not meet the 30 per cent broadband penetration set for the end of this year. The other operators also claimed that MTN is so spectrum rich, that it controls 38 per cent of the spectrum in the market; they are saying this based on the fact that it has the 700MHz and 2600.
The 2.6GHz is still available in the market; they can still go and buy. For the 700MHz, there are two other slots, one organization has one slot and there is another one sitting with a government agency. That is not even the issue. The issue is can MTN use 700MHz now? MTN can’t because there is interference up to about 60 per cent. We can’t use it optimally to deploy services towards attaining Nigeria’s broadband objectives. In other words, the argument of superiority in spectrum ownership does not add up, especially as the 2.6GHz is also impaired because of interference. While the NCC is in the process of solving the issue of interference, as it is, MTN cannot make use of 700MHz or the 2.6GHz optimally. So, I wonder where the superiority on spectrum ownership actually comes from. So, the chance of attaining our broadband objectives rests almost squarely on the 800MHz. Going by GSMA studies, 10 per cent increase in broadband penetration leads to 1.3 per cent growth in GDP. This means that access should be beneficial to the wider economy if there are no hitches such as those raised by others. We can achieve a lot with more ubiquitous broadband. I hope NCC will take a positive stand on the matter that would enable us to move forward as a nation. Dominance in itself is not an offence. It is the abuse of dominance that should be an issue. We believe the NCC has put measures in place to ensure that abuse does not take place.
Is it true that operators are not deploying network facilities in the rural areas any longer?
MTN has not stopped investing and it will not be appropriate for me to speak for others. We shall continue to invest because this is a major market for us. We have invested much more than our competitors as evidenced by the size of our network. We are saying that we need resources such as this spectrum to continue to deliver. Buying Visafone and 2.6GHz was a strategic decision taken to ensure that the capability to invest is there. So, from a rural telephony point of view, we are still investing and we shall continue.
In terms of FDIs, how will this move impact on the country’s drive?
The issue is if we are able to get what we want, it will be better for the economy. Let’s take it from this angle, India is considered the Business Processing Offices (BPO) destination of the world with call centres. Do you know that Nigeria has a huge advantage over India. Remember that the language of business is English. The people on the street of Nigeria, who speak better English than Indians comparatively, are there. So, if you have a BPO in Nigeria, the chances are that there would be more people coming from outside Nigeria that would need more BPO services from Nigeria than even India. Now, why are they not coming? They are not coming because the infrastructure is not there. What is the basic infrastructure needed for BPO, it is communications. So, it speaks for itself. Look at what our young people are doing at the technology hubs. What do they need to do more, they need broadband. Look at what the Vice President, Professor Yemi Osinbajo (SAN) is doing to support them. That effort must be complemented with communications infrastructure and broadband is key. So, MTN is ready to provide more support.
Will MTN be open for trade-off, say part of the 2600 to get the 800MHz?
We are open for anything that would bring development to this economy. MTN has the largest fibre network connectivity and we are sharing it with other players. We had the most number of BTS and we have unbundled them for efficiency of the industry and others are riding on it. Some other operators are still running and alive today because they have their radio equipment on top of the towers we unbundled. So, when that dominance issue comes up, I always say that the sky is big enough for every bird to fly assuming you are actually ready to take-off and fly.
There was a claim that MTN South Africa prevented Vodacom on same issue in South Africa and they want that replicated here. What do you say to that?
The first thing to note is that MTN South Africa is a totally different entity from MTN Nigeria. Besides this however, MTN Nigeria understands that the objection raised by MTN South Africa to the Neotel deal was premised on two key issues which were, that at the time spectrum trading was not allowed in South Africa and the Neotel deal was effectively a spectrum trading deal. In addition, there was a case for Neotel’s spectrum to be handed back to the South African telecommunications regulator (ICASA) and re-auctioned to the industry as the deal with Vodacom appeared closed. Now if you relate this to the situation in Nigeria, we have identified that spectrum trading is allowed in Nigeria and this further gives other the opportunity to transfer, share and lease spectrum resources. We have also identified that Visafone was also offered to other operators other than MTN and some operators were even in discussions with Visafone before MTN was approached. This speaks to the fact that the deal was not a closed one and was open for any willing investor to participate and conclude with Visafone.
So, it may be difficult to compare the situation in Nigeria and South Africa. Some interventions raised by NCC are not the same as ICASA. They are two different markets and is obtainable there might fail if adopted here.
How has the industry faired thus far?
I think it is interesting where the industry is going. Inspite of all the challenges, there is hope. I think people would have to come to the table and deal following NCC’s issuance of the spectrum trading guideline. There should be more consolidation. Resources are fragmented. I think business people should look at that matter to know if the way they are operating today is optimal. This issue of owning 10 per cent of something and 100 per cent of nothing would need to be looked into deeply. I think operators need to come together and see the way they can move forward. Globally, there are mergers and acquisitions. I think it will make sense if we go that way. It won’t be bad if we have just three or four operators. I think it is a conversation that should hold.
NCC is doing everything it should do to stabilize the industry, so I think the industry should support these moves. I also believe that government should declare telecoms infrastructure, Critical National Infrastructure to guard against some security lapses. Telecoms infrastructure should be accorded the right protection. All these networks whether MTN, Airtel, Globacom, 9Mobile and the tier two operators, they are all a single network because they are deeply interwoven. So whatever impacts one, impact others. So, there should be more security for the telecoms sector.