Nigeria will struggle to launch a fifth-generation (5G) network in 2022 due to the high cost of licence fee and the unavailability of sufficient frequencies to power commercial deployment of the technology, according to sources familiar with the matter.
At a meeting with stakeholders this month, Umar Garba Danbatta, the executive vice-chairman of the Nigerian Telecommunications Commission (NCC), informed operators that the 5G operating licence would cost them between N75 billion and N100 billion for the 10-year licence.
BusinessDay understands that the NCC has not yet made the fee official but is making considerations in view of the high cost of the spectrum for the technology.
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“At N75 billion, the implication is that operators would have to include N7.5 billion in their annual budgets every year for the next 10 years to settle the licence fee,” says Olusola Teniola, former president of Association of Telecommunication Operators of Nigeria (ATCON).
According to Teniola, the price tag would benefit big operators and foreign networks coming into Nigeria.
The 5G launch will also struggle due to the shortage of adequate frequencies in the relevant band for 5G, and at the last check, Nigeria had just 200G of available bandwidth and it will require 100G for each licence for the launch of 5G. So, the NCC will need between 400-500GHz.
The 5G spectrum refers to the radio frequencies that carry data from user equipment to cellular base stations to the data’s endpoint. The 5G frequency bands for 5G networks come in two sets. Frequency range 1 (FR1) is from 450MHz to 6GHz, which includes the LTE frequency range. Frequency range 2 (FR2) is from 24.25GHz to 52.6GHz. The sub-6GHz range is the name for FR1 and the mmWave spectrum is the name for FR2.
In May 2021, the NCC signed a memorandum of understanding (MoU)with Nigerian Communication Satellite (NigComSat) Limited to facilitate the release of a contiguous bandwidth in one of the most suitable frequency spectrum bands for early deployment of 5G in Nigeria.
Following the signing of the MoU, the two government agencies discussed on how to relocate the NG-1R satellite of NigComSat to the standard C-band 300MHz (3.5GHz-3.9GHz) portion of the band, which is considered more suitable in terms of satellite service offering because of the advantage of cheaper terminal devices for end-user. Such relocation leaves the non-standard C-band 400MHz (3.5GHz-3.9GHz) portion of the band for 5G use while the cost of relocating the NG-1R will then be offset from the proceeds of the auction of the 5G spectrum.
BusinessDay learns that NCC and NigComSat have yet to agree on the way forward. NCC is said to be currently negotiating with NigComSat to release some frequencies to it but it is unclear how progressed this negotiation is, sources say. The commission has already secured the approval of the Federal Executive Council (FEC), which is expected to speed up the negotiation with NigComSat.
While the prolonged negotiation constitutes a delay in the commencement of the spectrum auction, stakeholders say it is needed to properly align the expectations of the agencies and other parties involved.
Some stakeholders also note that in the past these frequencies were given out without proper value assessment. While many other countries have for a while been realigning their frequency requirement or needs and have been retrieving frequencies from some areas and reallocating to other areas, Nigeria, BusinessDay learns, has yet to get its acts together.
However, this frequency shortage is not a particularly Nigerian problem. The shortage of frequencies is partly why they are also very expensive around the world.
Beyond scarcity, industry players are divided on whether the N75 billion price level for the licence is too high.
“The operators that want to offer 5G services will include this cost in their business plan,” Ike Nnamani, president of ATCON, told BusinessDay, noting, “As long as the financial model makes business sense they will go for the 5G licence. If it does not make business sense they will not bid or acquire the spectrum. So, the final decision on this will be based on the business plan each operator wants to operate.”
His view aligns with some industry players who say the licence reserve fee is appropriate in this circumstance.
According to Teniola, the price could discourage small network operators in Nigeria from deploying 5G technology. The smaller network operators have yet to recover their expenses on spectrum for older generations.
Nigeria is still struggling to get 4G around the country. 3G and 4G coverage in Nigeria generally are still very low. For example, 3G coverage as of 2020 was at 49.4 million, a decline compared with 50.4 million recorded in 2019. 4G coverage in Nigeria is at 36.5 million in 2020 from 21.7 million reported in 2019.
The National Broadband Plan 2020 set an ambitious target for 3G coverage to at least 80 percent of the population by 2025. Less than four years to the timeline, coverage stands at about 50 percent while 4G is at 37 percent coverage.
Adebayo Gbenga, president, Association of Licensed Telecom Operators of Nigeria (ALTON), who is yet to see the figures, told BusinessDay that if the plan becomes reality, it could have implications for operators in the sector.
Two telecom licence holders, MTN and Airtel are projected to be able to afford N75 billion or consider it an investment worthwhile. There is also the attraction for those listed firms or those with international links who may see not taking the 5G licence as a failure. As technology evolves, companies cut operational costs by adopting the latest technology.
