The successful auction of the 3.5GHz spectrum licence on Monday this week by the Nigerian Communications Commission, which was won by MTN Nigeria Plc and Mafab Communications Limited has paved way for the deployment of 5G network across the country in 2022.
The Nigerian Communications Commission (NCC), in conjunction with the Federal Ministry of Communications and Digital Economy, on Monday this week, made history, when it successfully auctioned two lots of the country’s 3.5GHz spectrum licence, which MTN Nigeria Plc and Mafab Communications Limited won.
The auction exercise, which was keenly contested by three eligible bidders, MTN Nigeria Plc, Mafab Communications Limited and Airtel Networks Limited, was eventually won by MTN Nigeria Plc and Mafab Communications Limited at a bid price of $273.6 million each, after Airtel exited the bidding stage at the eleventh round, after offering $270 million as its highest bid offer.
The main bidding on Monday, which commenced by 11 am, came to a close at exactly 7.22pm, with all three bidders reaching the eleventh round of the bid process, before Airtel Networks exited after the eleventh round at $270 million offer. At the end of the main auction process, where the two winners emerged, both winners had to enter into another stage of bidding called the Assignment Stage, to determine, which of the winners will get the first lot and second lot, from the two available lots.
During the Assignment Stage of the bid process, MTN paid additional $15, 900,000 to get lot 1of the spectrum, while Mafab paid additional $11, 120, 000 to get lot 2.
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, as winners of the two lots in the 3.5GHz spectrum licence.
According to Danbatta, 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.
Danbatta said the winners would pay fully for the licence fee by February 24, 2022, and that the payment must be made in Naira denomination.
At the main auction exercise, which held at the Transcorp Hilton Hotel in Abuja, MTN was represented by its Chief Executive Officer, Mr. Karl Toriola, Airtel Networks was represented by its Chief Financial Officer, Mr. Sreeddhar Krishna Menon, while Mafab Communications Limited was represented by its Chairman, Alhaji Musibau Bashir.
With the successful auction of the 3.5GHz spectrum licence and the eventual planned payment of the licence fee by the two winners on February 24, 2022, NCC has set the stage for 5G rollout in Nigeria in 2022.
3.5GHz Bid Shocker
The emergence of Mafab Communications Limited, as one of the winners of the country’s 3.5GHz spectrum license, has remained a shocker to many Nigerians, especially among the telecoms operators, who did not expect that the newly registered company, which has a non-mobile licence, would win in the 3.5GHz spectrum auction.
Although Mafab Communications is not known in the Nigerian telecoms space, THISDAY gathered that it is a new entrant that was registered barely a year ago, and a strategic investor with a non-mobile licence that is investing in one of the small telecoms operators in Nigeria.
At the beginning of the auction process when the Chairman of Mafab Communications Limited, Alhaji Musibau Bashir was announced as the person representing Mafab in the bid process, many thought that MTN and Airtel, that have become household names in the telecoms industry, would eventually emerge winners, since there were only two lots to be won by only two operators. The majority were however proved wrong, when it was announced that Airtel exited the bidding at the eleventh round, leaving only MTN and Mafab to clinch the two lots in the 3.5GHz spectrum licence.
The surprise for telecoms operators who spoke with THISDAY, was that Mafab Communications is not a known telecoms operator in Nigeria and it is not among the big players in the telecoms industry. They are more worried because Mafab owns a non-mobile licence, and they are wondering how a company like Mafab who is investing in one of the small telecoms operators in Nigeria, would be able to roll out 5G network across Nigeria, even if it has the money to pay for the $273.6 million bid price. All eyes are therefore on Mafab Communications to successfully roll out 5G network across Nigeria by next year.
The Mock Auction
NCC had on Friday December 10, 2021, successfully carried out a mock session for the 3.5 gigahertz (GHz) spectrum auction for the deployment of the Fifth Generation (5G) network in the country.
The simulated auction was preparatory to the main auction, which also successfully held on Monday December 13, 2021.
The conduct of the simulation exercise was in line with the requirements stipulated in the Information Memorandum (IM) for 3.5 GHz spectrum auction. The IM is a document that defines the process for the licensing of the 3.5 GHz spectrum band earlier published in the commission’s website at the inception of the auction process.
Using the Ascending Clock Auction System for the mock session, the three qualified bidders for the 3.5 GHz spectrum, namely MTN Nigeria, Mafab Communications, and Airtel Networks, participated in the software-based simulated auction exercise.
The mock auction was witnessed by the Chairman, Board of Commissioners, NCC, Prof. Adeolu Akande; the Executive Vice Chairman and Chief Executive Officer of the Commission, Prof. Umar Garba Danbatta; Executive Commissioner, Technical Services, Ubale Maska and the Executive Commissioner, Stakeholder Management, Adeleke Adewolu.
According to NCC, the main auction would mark a turning point in Nigeria’s determination to harness the benefits of 5G for the nation’s socio-economic growth as concrete roll-out of 5G commences in 2022.
In a brief remark at the Mock Auction, Danbatta said the commission had taken all necessary steps to ensure due diligence on the credibility of the consultants and to safeguard the integrity of the software solution being used to carry out the implementation of this historic national assignment.
“This is consistent with the open, credible transparent and fair manner by which the Commission is known to have conducted previous auction processes, which have been locally and globally applauded,” Danbatta said.
In order to ensure a fail-proof process, the commission also carried out a simulation of the manual process of the auction, aside the electronic mock. This is to ensure that bidders are also familiar with the manual auction in case of any circumstances on the main auction day that may warrant a need to switch to the manual auction.
The Main Auction
At the beginning of the main auction process, NCC adopted the Ascending Clock format in auctioning the 3.5GHz spectrum licence, which allows the auction manager to continuously increase the bid price within a certain per cent threshold, as the bidding progresses from one round to another.
Before the bidding commenced, the Auction Manager, who is the Director of Spectrum Administration at NCC, Mr. 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, including journalists, 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 duration period for each round.
Although NCC had placed the reserve bidding price for the 3.5 GHz Spectrum at $197.4 million, the Auction Manager however commenced round one bidding process at a reseve price of $199,374,000 and all three contenders agreed with the new reseve price.
At the end of round one, the Auction Manager increased the reserve price to $201,367,740 for the commencement of round two. At the end of round two, the Auction Manager, again, increased the bid price to $204, 288,256.1 for the commencement of round three.
At the end of round three, the bid price for one lot of the 3.5GHz spectrum was increased to $209,497,962.5 for the commencement of round four. Round five commenced with a bid price of $215,782,901.38
Round six of the auction began with $224, 414,217.43 bid price per lot, and all the three eligible bidders were still in the competition.
From round seven upwards, the bidding time was reduced from 20 minutes to 10 minutes. The round seven commenced with $231,146,643.96 bid price per lot, while round eight commenced with $240,392,509.71 bid price per lot, with all the three eligible bidders still in the competition.
Round nine commenced with all three eligible bidders with a bid price of $251,210,172.65. Round 10 commenced with all three bidders with a bid price of $263,017,050.77, while round eleven also commenced with all three bidders with a bid price of $275,904,886.25. The main stage auction eventually ended at about 7.22pm with round eleven, with a final winning bid price of $273,600,000 ($273.6 million).
Non-refundable 10% Deposit Bid
Before the commencement of the mock and the main auction exercise, all the three bidders that expressed their interests to bid for the 3.5GHz spectrum, met all criteria, including the payment of the stipulated Intention to Bid Deposit (IBD) as outlined in the Information Memorandum (IM), which pegged the initial non-refundable deposit at 10 per cent of the reserved bid price of $197.4 million (N75 billion).
Giving details of the non-refundable 10 per cent deposit, the Director, Public Affairs at NCC, Dr. Ikechukwu Adinde, told THISDAY that the 10 per cent initial deposit was statutory and mandatory to qualify any operator to participate in the bid process. Adinde explained that since NCC was auctioning only two lots of the 3.5GHz spectrum to three bidders, only two out of the three contenders would emerge winners, while the loser would be refunded its initial deposit. He however said the winners could forfeit their initial 10 per cent deposit payment, if they fail to meet up with all necessary criteria, including payment of the final $273.6 million bid price and the additional $15.9 million and $11.1 million, which MTN and Mafab respectively offered to get a particular lot of the two available lots in the 3.5GHz spectrum.
Regulator’s Excitement
Excited by the successful and transparent auction exercise that led to the emergence of MTN and Mafab as winners of the 3.5GHz spectrum, Danbatta commended the Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, including the staff of NCC, for their roles in ensuring the success of the auction exercise.
According to Danbatta, “The 3.5GHz spectrum auction represents a culmination ot all the etforts at the international and national levels that have prepared Ngeria tor this momentous leap toward. Therefore, in line with the 5G Deployment Policy and global best practices, the
Commission has set in motion the process for the auction and will be offering two lots in the 3.5GHz band with three companies competing to acquire a licence for the available lots. The auction is based on the powers bestowed on the commission by Section 121 of the Nigerian Communications Act 2003 as well as the Licensing Regulations 2019.”
Pantami, who declared the auction open, said the Federal Executive Council (FEC), has on September 8, 2021, approved a National 5G policy for Nigerian Digital Economy. He said the national policy contained all the necessary information guiding the processes and procedures for the development of 5G in Nigeria.
According to Pantami, “The National Policy noted the key role of the National Frequency Management Council in the allocation of spectrum for the deployment of 5G networks in Nigeria. The NFMC is also to ensure that the required spectrum for 5G standard is made available in the most
appropriate and timely manner to enable investments, innovation, and
competition in the deployment of 5G services for the benefit of consumers and businesses.”
Pantami added that the main spectrum auction followed the successful mock spectrum auctioning process, which held on the 10th of December.
He commend the Board and Management of the NCC, as well as all stakeholders on the landmark event.
The Chairman, Board of Commissioners at NCC, Prof. Adeolu Akande, said the main objective of the auction was not just the offer of a premium frequency, but also aims to support the deployment of 5G in Nigeria, which has been identified as a critical factor for the growth of the national digital economy.
“The full socio-economic benefits of 5G technology is largely dependent on access to a variety of spectrum resources. Consequently, Spectrum plays a strategic role in meeting the insatable demand for advanced mobile data services as well as a new wave of wireless broadband use cases such as remote object manipulation, industrial automation, virtual and augmented reality as well as next-generation connectivity for vehicles,” Akande said.
5G Deployment
With the successful auction of 3.5GHz spectrum license, coupled with the mandate for winners to pay their bid price by February 24, 2020, the stage is set for 5G deployment in 2022.
NCC had commenced the process for the auction of the 5G spectrum in the last quarter of the 2021 and had since then, carried out a number of activities ahead of the main suction.
On October 7, 2021, the commission had published the draft Information Memorandum (IM) on the auction of the 5G spectrum on its website, and issued a public notice in major channels, including print, electronic, and new digital media. Comments on the draft IM were received by the commission up until October 28, 2021.
On November 3, 2021, the commission held a stakeholders’ engagement forum in Lagos at which comments received from a broad segment of stakeholders, including the major operators, were exhaustively discussed and considered.
On November 10, 2021, the commission published the final IM, and stakeholders’ comments thereon on its website and the national dailies, and set the deadline for the submission of bids on Wednesday, November 24, 2021.
NCC extended the date for submission of the bidding applications from Wednesday, November 24, 2021 to Monday, November 29, 2021.
On December 1, 2021, the NCC announced the three companies – MTN Nigeria, Mafab Communications, and Airtel Networks – as having successfully submitted their bids in line with the requirements of the IM.
The 5G network rollout in 2022, is expected to revolutionise the Nigerian economy, deepen broadband penetration and enhance Nigeria’s digital transformation agenda, as 5G has the capacity for low latency, increased broadband speed and faster download periods, with seamless internet connectivity.
THISDAY
