Leadership (Abuja)

21 February 2013

Nigeria: UK Sells 4G Mobile Broadband for £2.3 Billion

The UK Telecoms Regulator Ofcom has raised £2.34bn from its auction of 4G mobile spectrum as it concluded the Auction yesterday. The UK Auction results further exposes the Nigerian Communications Commission (NCC) the for selling the 4G 800MHz Spectrum for a paltry €13m to South African company Smile Communications in a secret set of deals that experts claims will cause loss of over N53billion to Nigerian Federation Account.

The secret deals have already claimed the Appointment of Engr. Bashir Gwandu, the former Executive Commissioner Technical Services of the NCC who exposed the series of fraudulent spectrum sells at a meeting chaired by the vice-president Arc. Namadi Sambo. Gwandu's removal has generated major national debate over the last few months and it further underpins the unprecedented level of corruption and impunity that characterize Jonathans Administration.

Dr Gwandu's major sins that earned him the removal as a commissioner from the commission on 26th November 2012 are three major issues he stood against; one, selling of 450MHz Spectrum to an unlicensed company- OpenSkys ltd reportedly owned by Mr Emeka Offor and powerful associates wherein they paid only US $6 million for a license that should have fetched the nation over $50 million.

Secondly, the N1.029bn waiver applied for by the Communications Minister Mrs Omobola Johnson and granted to MTS- a company that the NCC Chief Executive Officer, Dr Eugene Juwah in two separate Interviews granted on 16th June 2007 and 12th October 2012 admitted share ownership, at the expenses of the treasury and other companies operating under the similar conditions in the industry, and the third issue, was the selling of a 10MHz slot the 800MHz spectrum band to a South African company called Smile Nigeria Communications Limited at about euros €13 million only when exact equivalent spectrums were sold in Germany, Italy, France and UK for €1.153billion, €992million, €891million and €631million respectively, the UK earning slightly lower amount due to imposed strict coverage obligations.

The UK 4G bids were won by Everything Everywhere; Hutchison 3G UK; Niche Spectrum Ventures, a BT subsidiary; Telefonica (O2); and Vodafone. Ed Richards, Ofcom chief executive, in a BBC interview stated that the figure was lower because "we are in very, very different times", but he insisted that maximizing Revenue was not the objective of the Auction otherwise it could have fetched much more for the government.

Responding to Questions regarding lower revenue earnings of £2.34bn, the UK Regulator posited that the Key objective is widespread 4G coverage in the shortest possible time, which imposes rapid spending by some of the winners "Almost the whole UK population will be able to receive 4G mobile services by the end of 2017 at the latest." The Winner of the Spectrum that is similar to that of Smile (in the case of Nigeria) is Telefonica UK ltd.

The Company is having to pay £550m (€631m) for 10MHz duplex but with strict obligations. According to Ofcoms statement "Ofcom has attached a coverage obligation to one of the 800 MHz lots of spectrum. The winner of this lot is Telefónica UK Ltd.

This operator is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of each of the UK nations - England, Northern Ireland, Scotland and Wales - by the end of 2017 at the latest" This singular obligation is has technically increased the cost of the Spectrum in that the operator would have to incur expenditure that it would otherwise not incur at before 2017. The main benefit of rapid coverage goes to the UK consumer.

A Nigerian Telecom Industry experts says, "The Nigerian Population is higher and is rapidly growing, Economy is also growing faster than in Europe, Average Revenue Per User (ARPU) in Nigeria stands around $15 whilst in Europe it is around $24, therefore with these Secret NCC deals, competition in the Nigerian telecom market stands to be disrupted as it will be difficult to imagine how companies that pay $400m for a 2G GSM-license, another pays a minimum of $150m for 3G license and then a competitor comes along and pays only €13million for a better 4G spectrum, using which, deployment cost will be just a fraction of what the higher payers will spend, and yet compete in the same market."

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