Lagos — For Mike Adenuga, the successful conclusion of bidding for GSM licences January 19,2001, was the "most transparent they have done in Nigeria. I doff my hat for President Obasanjo and the NCC (National Communications Commission)."
Adenuga, billionaire businessman, banker and oil mogul, was excited as he spoke with journalists at the Nicon Hilton Hotel in Abuja, Nigeria's inland capital at the end of the bidding. His company, Communications Investment Limited, CIL, had emerged as one of the winners of the three slots auctioned by the government. The other winners were Econet Wireless Nigeria Limited and Mobile Telecommunications Networks.
But barely a month later, things have turned sour for CIL and its quest for a digital mobile telephone licence. CIL's licence, an official of NCC told Allafrica by phone from Abuja Tuesday, "has been revoked, based on what is on the Information Memorandum."
What went wrong for CIL depends on who you talk to. The NCC says CIL failed to pay for is licence in time; CIL says it had demonstrated that it had produced the funds but was delaying the final stage of payment, because it was trying to clarify the status of the frequency it had been allocated.
On winning the auction, the three winners (and M-tel, subsidiary of the state-run Nigerian Telecommunications, for which the fourth slot had been reserved) were required to pay a licence fee of $285m. Each had paid a non-refundable deposit of $20m before the auction, and were required to pay the balance of $265m within two weeks of the auction.
But the NCC says that by the deadline, February 9, 2001, CIL's check for the $265m had not arrived at Chase Manhattan in New York, bankers for the Nigerian Central Bank, where the payments had to be lodged. The other three winners met the deadline but the NCC says it did not hear from CIL until three days after the deadline.
CIL disagrees. After winning the auction and before the payment deadline, the company says, it raised a query about the frequency it was expected to use, because the frequency was already the subject of litigation, involving a previous user.
"When you begin from day one with a frequency that is encumbered, that puts you at a disadvantage with your competitors," a spokesman for CIL told Allafrica Tuesday. He said CIL realised that the frequency given to it by NCC had previously been awarded to another company, and was the subject of a court case.
CIL demanded a guarantee from the NCC "that this frequency will not come under controversy." In order not to risk missing the deadline for licence payment while the issue was being resolved, CIL's financier, BNP Paribas, arranged that the $265m be paid into Chase Manhattan to be held, pending receipt of the guarantee they were seeking from the commission.
CIL's spokesman admits that the company's representations to the NCC had been "verbal" rather than written. But CIL went on to communicate with the NCC in writing when BNP Paribas raised the same doubts and demanded a written commitment from the commission that there would be no problems with CIL using the frequency.
The NCC confirms that CIL wrote the letter expressing concerns about the frequency but says that there was no indication that payment of the licence fee was being delayed, pending a response; a commission spokesman has been quoted as saying that the frequency issue was clearly an afterthought, and an excuse to explain the delay in payment. As far as the NCC is concerned, the licence conditions have not been met.
Last Monday, the NCC made three proposals to the government on how to deal with the licence that it says CIL has forfeited. The options: keep the licence "for some time"; auction the licence to new bidders; or reserve the licence for the second national carrier.
The CIL remains optimistic, despite the NCC's view that CIL has lost the licence. "As far as we believe, the decision is still reversible," said the spokesman. "We are talking to those who can take the decision or reverse the decision."
However the dispute is resolved, Nigerians are now looking to the GSM telephone to bring order into an otherwise chaotic telecom industry. Each of the licence winners is expected to commence operations within three months from the auction date. Each is expected to install at least 30,000 lines within one year of operation.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
CIL has been preparing for GSM service for seven years. At the moment, the company would be able to handle 30,000 subscribers. Econet Wireless on its part has said it plans to raise its subscriber base to 400,000 by year-end.
With an installed capacity for an estimated 760,000 fixed phone lines, the Nigerian market is one of the worst-served in Africa. Moreover, only about 400,000 lines out of the installed capacity are actually connected. That gives Nigeria a teledensity - the number of phone lines per 100 people - that is among the lowest in sub-Saharan Africa.
It also reflects on the length of time it takes for an ordinary Nigerian to acquire a telephone line. Currently, Nigerians wait for an average of 10 years to get a telephone line.
Those, that is, those who wait to get the lines through official channels.
The long waiting time is not just due to the high cost of acquiring a line. Up to 1999, the official price for a fixed line was 50,000 naira. But those who really wanted to get lines could speed things up by paying about three times that amount.
