17 February 2014

Nigeria: NCC Auctions 2.3 GHZ Spectrum Wednesday, Assures Bidders of Transparency

Photo: IT Web Africa
Bitflux Communications.

The Nigerian Communications Commission (NCC) will on Wednesday and Thursday this week, begin the actual auctioning of the 2.3GHz spectrum licence between two pre-qualified bidders, Globacom Limited and Bitflux Communications Limited.

The two companies emerged at the pre-qualification stage, after some of the contenders withdrew from the race for various reasons.

The payment of a non-refundable initial bid deposit of $2.3 million, among other factors, qualified them for the next round, which is the proper bidding exercise.

NCC had fixed a minimum reserved price of $23 million for the auction. This means that the bidding, which opens on Wednesday this week, will start from $23 million and the highest bidder will emerge the winner of the licence.

The Executive Vice-Chairman of NCC, Dr. Eugene Juwah, told THISDAY that the auction exercise would be computer-base while the commission would strictly adhere to the computerised process, to make the entire bid process highly transparent.

Other contenders that willingly withdrew from the race were Zinox Telecommunications, an arm of Zinox Group, Airtel Nigeria, MTN, Etisalat and Spectranet.

Reacting to the emergence of the two bidders and the planned strategy by NCC to allow the highest bidder win the licence, a Lagos based telecoms analyst and Chief Executive Officer of Cyberschuul News, Mr. Titi Omo-Ettu, told THISDAY that he was shocked that other contenders had to withdraw, leaving only two bidders to emerge.

According to him: "The announcement that two firms, Bitflux Communications Limited and Globacom Limited are the only shortlisted bidders to participate in the forthcoming 2.3GHz Frequency Auction shocks me.

"Baring the NCC giving a good explanation that I am unable to forecast, I am surprised that the lack of interest shown in the licence, tells a very bad story of the industry, and that our Second National Operator is also on the list and on its way to cornering the licence into its bouquet of licences gives some worry.

"I have done some industry search and found that those who constitute Bitflux Communications Limited are young enterprising Nigerian professionals who have made a point of excellence in the industry although are far away from being money bags. I understand Bitflux is a Consortium of VDT Communications Limited, Bitcom Systems Limited and Superflux International Limited. Those are companies that are the hopes of the industry when the prospects of a well managed broadband landscape is considered." Omo-Etto said.

He, however, said his comment was not a protest against Globacom but a strong feeling against monopoly, which he foresees.

Omo-Etto, who said there was nothing legally wrong in Globacom picking up the available licence, insisted that the purpose of regulation goes far beyond playing legally, but more with the need to examine legal, moral and development objectives, make interventions and go ahead to legislate what ordinarily would end up having an industry, where the yawning gaps between peoples and classes are truly closed.

"Of course we cannot pretend that it is all good that our Second National Operator (SNO) for eight years has no known rollout of fixed services, which depicts the status of SNO," Omo-Ettu said. Another analyst, expressed some form of apprehension over the planned bidding, since NCC had put a reserved bidding price. According to him, what that means is that the winner would be anyone with bigger financial muscle.

He insisted that the true winner that would make better use of the spectrum licence would not emerge, since the bidding had to do with money. He suggested that the NCC should consider other important factors, aside money, in announcing the eventual winner.

Group Chief Operating Officer of Globacom, Mr. Mohammed Jameel, told THISDAY that the 2.3GHz spectrum band would further help Globacom in rolling out its fixed line services. Giving reasons why the Second National Operator had not been able to rollout its fixed lines services, Jameel said the challenges of fiber cut and delay in getting approval to dig up ground to lay cables, contributed to the delay.

He, however, promised Nigerians that it would use the 2.3GHz spectrum licence to rollout its fixed lines, if it eventually wins it. But NCC said it would go ahead with the process, and make it transparent. According to NCC, the two companies that emerged in the pre-qualifying stage had complied with the pre-qualification criteria set out in the Information Memorandum for the 2.3GHz spectrum licence, and the commission had announced both communications companies as the approved bidders for the auction of one frequency spectrum licence in the 2.3GHz band.

In order to ensure transparency in the exercise, the NCC ensured that pre-qualification criteria did not make it necessarily mandatory for applicants to have any telecommunications operational licence in Nigeria, to qualify to bid.

However, applicants should be companies registered with the Corporate Affairs Commission (CAC) and must transfer an Intention-to-Bid Deposit of $2.3 million into the designated bank account. The deposit would bind the applicant to take up a licence, should it be a successful bidder, at the reserve price or any higher bid value submitted during the process.

Also, applicants should be independent from all other applicants under this allocation process. Again, licensed operators participating in the process must fulfill all existing obligations to the commission including payments of annual operational levy and Spectrum and National Numbering Plan fees prior to pre-qualification.

At the end of the exercise, the successful bidder will be granted a Whosale Wireless Access Service Licence (WWASL) and the specified should be paid before the licence is issued. The tenure for the WWASL licence will be 10 years and subject to renewal.

Stating reasons for their pull-out in the auction, Zinox said it's withdrawal was based on its subsequent decision, where it prefer to focus on its core end to service delivery.

Corporate Communications Adviser to Zinox Telecoms, Mr. Uche Nnadozie said: "There was a last minute decision by the company's board which discouraged the management from the bid. The board argues that 2.3GHz license will divert attention from our core competence." He added, "We are already an end to end solutions service provider in the ICT sector. So the advice of the board is that we should focus on our core competence."

Airtel's Chief Executive Officer, Mr. Segun Ogunsanya, also stated in Lagos that Airtel decided to back out from the 2.3GHz spectrum preferring to wait for the 700MHz spectrum of digital dividend that would be available to operators come 2015 after migration from analogue to digital broadcasting must have been successfully implemented in Nigeria.

However, THISDAY gathered that some of the key reasons why they withdrew were not unconnected with their fear of losing the initial deposit of $2.3 million, which represents 10 per cent of the bidding price and fear of subsequent litigation.

Some of the companies reckoned that since the auction is a wholesale licence of the 30Mhz of the remaining 40Mzh of the 2.3GHz spectrum band to a single company, meaning that those who are not winners would automatically lose their initial $2.3 million, which is non-refundable.

On the fear of litigation, the solicitors to one Snytel I. G. Wills Communications Limited (Snytel), had on January 30, 2014 published a notice, and made reference to a 2.3 GHz spectrum to belong to Nigeria Telecommunications Plc (NITEL)/MTEL and a warning was issued that any person, company, corporation or commission who buys or sells the assets and shares of NITEL would be liable for contempt and the sale is liable to be set aside.

However, NCC had, in a reaction through a public notice, allayed "the fears (if any) of all persons who have either expressed interest or are desirous of participating in the 2.3 GHz Spectrum Auction which will hold on February 19 and 20, 2014."

The commission said it had reviewed the National Frequency Plan, the court order and the originating process in Suit No. FHC/PH/CS/471/2011 filed by Snytel against the Federal Government of Nigeria, Attorney General of the Federation, National Council on Privatisation, Ministry of Finance, Bureau for Public Enterprise and NITEL.

NCC said it remained the agency reposed with responsibility to assign spectrum, and that it had not assigned spectrum in the 2.3 GHz Band to either NITEL or MTEL, saying: "It is therefore untrue and mischievous to claim that the spectrum constitutes part of the assets of NITEL/MTEL."

According to NCC: "By virtue of a widely publicised process, the Commission had in 2009 assigned 2 frequency slots in the 2.3 GHz Band to deserving applicants. To date, the assignment has not been challenged and the winners have been successfully deploying services on this spectrum since 2009."

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