In what many have described as a classic David and Goliath battle, little-known Bitflux Communications Limited has emerged winner of the 2.3 GHz frequency auction with a bid of N3.8 billion ($23.25 million) to beat national carrier, Globacom. The federal government, through the Nigerian Communications Commission (NCC) had placed a reserve price of N3.6 billion for the remaining 30MHz of 2.3Ghz frequency spectrum sale. The winning bid is 5.5 percent above the reserve price set by the regulator. A reserve price represents the minimum amount for which an item is on offer in an auction.
The outcome of the spectrum auction is contrary to the expectations of industry watchers, as Globacom, owned by Mike Adenuga, was tipped as clear favourite to win the spectrum auction conducted by the telecoms regulator.
Bitflux Communications, a consortium of three firms, including VDT Communications Ltd, Bitcom Systems Ltd and Superflux International Ltd, emerged winner after the second round of auctions, with $23,.251,000.00 to Globacom’s $23, 050,001.00 at the Transcorp Hilton Hotel in Abuja.
By winning the spectrum auction, Bitflux has become the sole provider of wholesale wireless broadband to other service providers in the country. Eugene Juwah, executive vice chairman, NCC, explained that both contestants at the first round, were tied, non bided at the initial bid price of $23 million plus 15 per cent mark-up, which puts the price at $26.4 million, but the software system used took the competing firms to the tie breaker.
He however pointed out that it was at the second round that Bitflux Communications Limited floored Globacom to win the coveted licence.
Juwah, explaining the processes, said Bitflux Communications has 14 working days, starting from yesterday to pay the fee, failure of which may provide opportunities for Globacom to acquire the licence as the second highest loser ,as contained in the Information Memorandum of the auction.
Stakeholders in Nigeria’s telecoms industry expressed delight with the outcome of the spectrum auction, further adding that that this would prevent the creation of a monopoly. Speaking on the process, Nwalune Augustine, Director of Spectrum Administration, NCC, informed that the process, which started in November 2013, had 27 bidding firms, “but when the Information Memorandum was released, only two firms, which competed today, met the set criteria, and we now have a winner in Bitflux Communications Limited.”
Commenting on the result, Mohammed Jameel, chief executive officer, Globacom, congratulated the commission for the success of the auction. He however, explained that “we at Globacom felt that the minimum bid price was much higher compared to the spectrum itself. So our business model did not suit that price and we didn’t offer much.
“As the EVC has said, we shall participate in future auctions.” Speaking on behalf of Bitflux, a director, Biodun Omoniyi thanked the NCC for its transparency in the whole process. “We can’t call Globacom a competitor, but there was a contest today. What happened today (yesterday) surprised everybody, it wasn’t the expected result. But at Bitflux, whatever might have happened today, we followed simply our business plan. We simply took a patriotic stand that if Globacom is there we cannot win if they really wanted the spectrum. We thank them for being so magnanimous.”
On its capacity to make payment before the due date, another director with Bitflux, Tokunbo Talabi, said the firm was financially ready before going into the bid.
The industry’s focus is shifting from voice to internet and data services which are of high value for business, education, healthcare, social and entertainment purposes.
According to the NCC, the licensing of the spectrum has been influenced by the need to provide retail Internet Service Providers (ISPs) and other users with the requisite wholesale wireless access and bandwidth to provide services to their subscribers, in line with the National Broadband Plan.
Bitflux will be expected to interconnect with the Infrastructure Companies (InfraCos) at their Points of Access (PoA), thereby creating an integrated broadband service nationwide to homes and firms.
By: Ben Uzor Jr