The Nigerian Communications Commission (NCC) said it has qualified three bidders for the auction of a 3.5GHz spectrum set to hold on December 13.
The commission said interested parties in the auction include MTN, Mafab Communications Limited and Airtel Africa.
A condition to participating in the auction is that each interested operator was supposed to pick up the interest form, fill it and submit it on or before 5pm, 29 November 2021. The form will be accompanied by a non-refundable 10 percent initial deposit of the reserve price.
The NCC has in recent times fast-tracked its efforts towards ensuring a 5G rollout in Nigeria, beginning with securing the approval of the Federal Executive Council in October for a National Policy on 5G Networks to drive the digital economy.
In November, the commission said it was 97 percent ready for 5G deployment and would auction the 3.5GHz spectrum. Before the main auction, there will be a mock auction to take place on 10 December.
What is a spectrum auction?
Spectrum is the airwave that sends signals to devices such as cellphones and wireline telephones enabling them to connect with each other. The airwaves must be sent as designated frequencies to avoid any kind of interference.
These airwaves are sold for a certain period of time, after which their validity lapses, which is generally set at 10 years in Nigeria. At the end of the validity period, the licensees are expected to renew the licence as the NCC reserves the right to resell dormant licences after a period of time.
The federal government owns the airwaves. With the expansion in the number of cellphones, wireline telephones, and internet users, the need to provide more space for the signals arises from time to time.
The spectrum or airwave is subdivided into bands that have varying frequencies. AM and FM channels are all spread around 100MHz to 200MHz. The telecom spectrum starts from 800MHz and goes up to 2300MHz. The most suitable spectrum for telecommunication is in the 400MHz to 4GHz range. These bands are used globally for various telecom purposes. As a result, different standards such as GSM, WCDMA, and LTE were developed over time to use these bands, creating an ecosystem of technology that operators can deploy. Each country regulates the use of spectrum in its own territory but the same technology finds use around the world, which is how there are roaming services.
A trail of spectrum auctions in Nigeria
Nigeria has had several spectrum auctions. Following the enactment of the Nigerian Communications Commission Decree No. 75 OF 1992, the NCC became responsible for radio spectrum licencing in the country.
The commission has a list of seven auctions it has conducted in the past. These include the 2 x 70 MHz slot in the 2.6GHz spectrum band in slots of 5MHz; 30 MHz of unpaired spectrum in the 2.3 GHz band; 40 MHz of paired spectrum in the 2 GHz band; 3 Carriers in the 800MHz spectrum band in 26 States, and FCT; four spectrum packages in the 900MHz and 1800MHz bands; Fixed Wireless Access licences on a regional basis for the 37 Licensing Regions; second national operator licence.
The last auction the NCC has conducted was the auction of the 2.6GHz which was suspended twice, in February 2015 and March 2015. The NC later resumed the process on May 16 to 19 and expected bidders to have made payment by June 10, 2016. Only MTN indicated an interest in applying for six lots out of the available 14 slots in the 2.6GHz spectrum licence. The NCC reviewed MTN’s application and in June 2016 announced the telco as the winner of the 2.6GHz spectrum licence.
The 2.3GHz spectrum was auctioned in February 2014. The reserved price was $23 million but Bitflux Consortium made up of VDT Communications and Superflux Group bid $23,251,000 to outbid Globacom whose bid was $23,050,001. Bidding opened at exactly 11.30 am and by 12.05 pm, a winner had emerged. It lasted only two rounds of 15 minutes each round against popular expectation that the auction may stretch all through the day into the next day.
The 40 MHz of paired spectrum in the 2 GHz band in 2007 was the first time Nigeria was auctioning spectrum for 3G. The auction had four telcos including MTN Nigeria, Globacom Celtel, and Alheri Engineering Limited bidding for 10MHz lots in the 2GHz band each. The NCC announced it was going to award the spectrum to the four companies as soon as the reserve price of $150 million within 14 business days of award of provisional licence.
For the 3 Carriers (3.75MHz) 800MHz spectrum band licence in 26 states and the Federal Capital Territory, Visafone Communications Limited emerged as the reserved bidder ahead of Multilinks and two other telecoms companies. According to the NCC only four licenced companies, namely GiCell Wireless, TC Africa Telecoms Network, Multilinks, and Visafone Communications, met the pre-qualification criteria, including payment of N40 million intention-to-bid deposit, at the close of business on July 9, 2007.
The Fixed Wireless Access (FWA) was issued to 11 companies to offer wireless internet and data service across the country on 1 July 2007. The companies that received the licence include XS Broadband Limited, Witel Limited, Rainbownet Limited, Odua Telecoms Limited, Cyberspace Limited, ipNX Nigeria Limited, and Wideaways Nigeria Limited.
Others include Hyperia Limited, Mega Tech Engineering Nigeria Limited, Sirius Wireless Limited, Horizon Broadcasting and Telecommunications Limited, and Swift Networks.
Auctions and criticisms
Although the NCC has always tried to employ best global practices in conducting auctions, it has not always been devoid of controversies. The auction in Nigeria for a second national operator licence aimed at breaking the monopoly of NITEL led to some controversies. The process that led to the emergence of the winners was declared fraudulent by the then President Olusegun Obasanjo administration in 1999.
There was also a controversy with the 2.3GHz frequency auction in February 2014. In early 2013, operators such as Mobitel, Spectranet, and Direct on PC – all of which already operate on the 2.3GHz band – said they were opposed to the issuance of the new licence on the grounds that additional traffic at 2.3GHz would cause interference in the band, which would, in turn, have a negative impact on their business. The auction of the 2.3GHz band went forward despite the criticism of the deal.
The upcoming auction of 3.5GHz has also been criticised for the reserve price of N75 billion. MTN had told the NCC that the reserve price was 136 percent above the market price of 100 MHz of 3.5GHz spectrum. The high price may be the reason local telecom operators like 9Mobile and Globacom have yet to submit a bid for the 5G spectrum licence. Globacom told BusinessDay in October that it is monitoring the process and would respond in due time.