This Day (Lagos)

21 January 2014

Nigeria: 2.3GHz Broadband Spectrum Winner to Pay Additional N374 Million

In addition to the bid price, which is presently fixed at a minimum of N3.6 billion, the eventual winner of the wholesale frequency spectrum licence in the 2.3GHz band on auction by the Nigerian Communications Commission (NCC) will pay N374.6 million, according to sources at NCC.

THISDAY gathered that President Goodluck Jonathan has already approved the extra payment. According to the pre-auction clarifications obtained from NCC, the winner of the spectrum will also be required to obtain a Unified Access Service License (UASL), which the telecoms regulator has valued at N374.6 million, as a precondition to becoming the wholesale broadband service provider, reports Technology Times.

"A successful bidder without a UASL licence will be issued a WWASL licence upon payment of the specified fees," said NCC, underscoring that it will also not allow the eventual winner to forge an alliance with an existing unified access licensee, a development that would mean not shelling out the N374.6m licence fee.

However, if the winner currently has a UASL, it will be able to save the extra N374.6 million. If it does not, it would not be allowed to piggyback on any existing holder of the same licence, according to the telecoms regulator, which has thrown the bids open to existing telecoms licensees and new entrant companies that were duly registered under Nigerian laws.

According to Technology Times, 16 companies have so far been issued unified access licences, including three of the big four GSM networks as well as companies linked with big businessmen like Aliko Dangote, President of Dangote Group; Visafone Communications owned by Jim Ovia as well as Smile Communications jointly-owned by Irene Charnley, former Director of MTN Group and Arab investors.

The NCC said the joint bouquet of the N374.6 million Unified Access Licence (UASL) and the Wireless Wholesale Access Service Licensee (WWASL), which would be sold in the bids would speed up broadband development for the country.

The telecoms industry regulator recently pegged a N3.6billion ($23million) reserve price for the single spectrum being offered for sale as part of a Presidential Broadband Plan to promote diffusion of high-speed Internet services across the country.

The NCC, which is presently receiving reactions from bidders who have applied, said that with the emergence of the wholesale broadband provider, undersea cable companies that currently provide both wholesale and retail broadband services in the market would be made to adhere to licence restrictions.

"The submarine cable infrastructure and landing station licensees will continue to provide their services based on their license conditions. The WWASL licensee may be a subscriber of the submarine cable infrastructure and landing station licensees for bulk International bandwidth. They are playing in different segments of the market," the NCC said.

NCC also conceded that bidders could pay in Naira in the dollar-denominated frequency spectrum sale. The regulator provided two accounts, one in Guaranty Trust Bank Plc and Zenith Bank Plc, where bidders hoping to pay in Naira can deposit their funds while

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adding that, "companies that wish to pay in Naira should pay the naira equivalent of the designated amount at the prevailing exchange rate for the date of payment."

"Presently we are receiving reactions from bidders that have applied and after that, we will begin receiving the initial bid deposit that will allow the bidders enter for the auction. What the NCC has done is to fix a minimum bidding price of $23 million and from this point, bidders can fix what they think they can pay and the highest bidder wins at the end of the day," the Executive Vice-Chairman of the NCC, Mr. Eugene Juwah, said in an interview with THISDAY.

The economic importance of the auction, according to the NCC boss, is that it would open business opportunities for Internet Service Providers (ISPs), that are on the verge of collapse.

"The 2.3 GHz frequency spectrum is a wholesale spectrum, and what this means is that the operator who will eventually win it, will not retail it, and compete with end users, but will be bound by law to sell wholesale to smaller operators like ISPs. It also means that the ISPs will be able to buy little wholesale quantity to service their customers and in the process, remain in business of providing affordable internet service to end users," he pointed out, adding that "frequency is like a rare commodity and the best way to sell it is to auction it and that is what the NCC is doing."

This auction process, therefore, underscores the plans by the industry regulator to foster penetration of high speed Internet services across the country. The licence on offer, in the upcoming bids, is the last 2.3GHz as three other companies had hitherto been awarded similar spectrum to deliver Internet services only to end users.

The auctions would be an all-comers affair as companies that were duly registered in Nigeria could participate once they could shell out the stipulated funds and meet other pre-qualification requirements.

THISDAY gathered that though existing telecoms companies were not excluded from the auctions, they were expected to scale stiffer pre-qualification.

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