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Battle over Visafone’s 800MHz spectrum

•9Mobile, Airtel raise objections to MTN bid
•Our bid driven by rural telephony desires, says MTN
•If acquisition was approved, MTN deserves the spectrum – ALTON boss

By Prince Osuagwu (Hi-Tech Editor) & Emmanuel Elebeke

The proposed acquisition of Visafone operating licence by MTN, to enable it have authorised access to the defunct Code Division Multiple Access, CDMA operator’s 800MHz spectrum band is not going down well with other telcos in the country.The issue which resulted in a legal battle between MTN and another operator 9mobile,  has been a time bomb since 2015 when the regulator, the Nigerian Communications Commission, NCC, announced it has authorised MTN to acquire 100 percent equity in Visafone.However, the explosion let off, Monday, when in apparent search for  clear direction, the NCC gathered the telcos and select stakeholders to a public hearing meant to resolve the impasse.

MODERM

Time bomb

No sooner had the regulator introduced the issue than the time bomb erupted at its corporate headquarters in Abuja where the meeting held. Objections from representatives of Airtel and 9mobile set the meeting into a frenzy  as it dawned on the regulator that peace was far on the horizon on the issue of the 800MHz spectrum sale.The two telcos argued that if allowed to acquire the spectrum, MTN’s stake would increase from 38% to 50% of the entire spectrum available in the country.The acquisition involves transfer of Visafone’s operating licence and resources, including 800MHz spectrum from Visafone Communication Limited to MTN Nigeria.But MTN said fellow operators challenging a duly bidded and acquired facility just from mere assumptions that it would get bigger than them were doing so without informed industry data.Besides, the company said the desire to acquire Visafone in the first place was not selfish but of patriotism. It argued that for a country like Nigeria with poor rural telephony and broadband penetration, it behoves on corporate entities like it to direct investments towards those areas. It claimed the desire to roll out rural telephone services was the primary aim of seeking approval for the spectrum.

Commonsense

Meanwhile, Chairman of the Association of Licensed Telecom Operators in Nigeria, ALTON, Engr Gbenga Adebayo, has called for calm among the operators who are also members of his association, and instructed that common sense should prevail on the issue.Adebayo said that the solution to  the problem lies with assessing whether the bid process was fair and square and contended that if MTN acquired Visafone’s liability and assets in a fair and square manner, it deserved to have the spectrum.Although Adebayo said he spoke on a personal capacity, he also contended that if invited to a public hearing in the capacity of ALTON President, he would also make such inputs on behalf of the association.Recall that on the 7th of December 2015, the NCC granted MTN Nigeria final approval for the acquisition of 100% equity in Visafone. In 2016, Visafone sought NCC’s approval to transfer its operating and spectrum licences to MTN to ensure the optimal use of its spectrum holdings.

However, after series of letters between the two entities, the NCC stated the transfer of Visafone’s licences was not contemplated under the approval that it granted to MTN to acquire Visafone.The commission further maintained that in the interim, both MTN and Visafone were viewed distinctly and therefore, stipulated six interim measures including how Visafone should treat its customers that were to be migrated to the MTN network. It also stated the need to separate accounts for both entities pending the final determination of the license transfer request, amongst others. Shortly after, Emerging Markets Telecommunication Services Limited now trading as 9mobile, instituted separate legal action against NCC, MTN and Visafone seeking an injunction to prevent MTN from accessing the 800MHz spectrum and a judicial review of the Commission’s decision to approve the acquisition.

Scarce national resource

Arguing his point at the NCC’s public enquiry,  Head of Regulatory Affairs, 9Mobile, Mr. Chidozie Arinze said spectrum remains a scarce national resource available in limited quantity and as such cannot be leased to only MTN to the detriment of other operators.He argued that the 800MHz spectrum from Visafone must be managed in a more efficient manner and must not be given to one operator to avoid creating monopoly in a liberalised market. He also expressed fear that should MTN be allowed to have such a spectrum which will mean dominating the market, it will monopolize 4G data platform and set prices that others could not afford to copy due to their own market stands.He said:    “…it is like giving all Nigerian oil wells to one individual. The 800MHz spectrum is good for 4G operation and every operator wants to deploy 4G. If MTN is allowed to monopolize 4G, it can be priced anyhow”.

“MTN has 4G spectrum already and it wants to get this. In essence, it will be controlling 50% of the available spectrum in Nigeria. This is not done in line with the extant guidelines. It prohibits control of facility that cannot be replicated by competitors. If they get this spectrum,competitors don’t have similar spectrum and cannot have access to it,” he further argued.

Similar acquisition in South Africa

Arinze further noted that MTN had earlier opposed similar acquisition in South Africa and queried the justification of its bid to replicate what it rejected in South Africa?“It is important that Nigerians understand that MTN fought similar transaction in their country. If that acquisition is not good for South Africa, why is it good for Nigeria? Spectrum is the same all over the world and in the UK, the regulator places a cap on the amount of spectrum an operator can buy. We expect same thing in Nigeria because it is a worldwide phenomenon, not peculiar to Nigeria.What we propose is that this spectrum is very valuable, it belongs to Nigeria. The commission must consider the best interest of this country and the subscribers’ in assigning this spectrum.We propose that the same thing that was done in SA should be done here. The spectrum should not be left to MTN alone but be made available to all operators in a cost effective manner by the Commission.”

Also arguing in similar way, the Airtel representative, Lucky Ubani asked the NCC not to allow MTN acquire the spectrum as such step would extend its market dominance beyond voice segment, which he said could spell doom for the industry.He warned that care should be taken in order not to create another monopoly in the market and urged the regulator to come up with measures that would enable other telcos to operate side by side with MTN.He said: “In India there is a specific cap to which a single operator should acquire spectrum otherwise there will be a huge disadvantage. The Commission should re-plan the Ghz spectrum bands with the National Spectrum Management Commission and the National Broadcasting Commission for the benefit of all.  If we continue to allow this to happen, it will not be well for the industry,” he stated.

Reacting, MTN representative, Johnson Oyewo dismissed the position of 9Mobile and Airtel, saying that their positions were based on presumptions and lack of supporting data.  He said the desire for the acquisition of Visafone and its 800MHz spectrum was not driven by selfishness but for network expansion and to help the country achieve the 30% broadband penetration target by end of 2018.He regretted that instead of being appreciated by fellow operators, MTN was being put on trial because of its insatiable appetite for investment in every segment of the telecom industry.

Rural telephony

Oyewo also added: “we want to expand our network to the rural areas and that is the advantage the 800MHz has to a long distant operator with less resources. We want to help the Rural Telephony Project. At large, it is Nigeria that will benefit from it.“With this transaction, MTN can leapfrog towards the 30% broadband target, which is in line with broadband objective of Nigeria. We see a greater good. We urge the Commission that this assessment should not only be based on competition but also on the interest of the consumer as well and economic objective of the economy because our investment will result in a direct impact on the GDP”.

However, Chairman of ALTON, Engr Gbenga Adebayo said: “The MTN-Visafone deal went through bidding and acquisition process and anybody could have emerged preferred bidder, other than MTN and if that had been the case, would all these arguments emerge? The answer is no. So, I do not think that double standards are advisable in our industry because of the implications.If MTN acquired both assets and liabilities of Visafone, it is only sensible that it deserves the spectrum. If the fear is that it would become a monopoly, there are instruments of checking monopoly which the regulator could always readily apply.We should not also forget that Visafone which is the subject of this issue also acquired assets and liabilities of three big CDMA operators and instantly became a top CDMA operator. There was no issue like the MTN acquisition is drawing.I have always advised against actions that may send wrong signals to investors. The industry needs plenty of investors and we shouldn’t jeopardise efforts at attracting them with the decisions we make” he added.

Disruptive innovations

The Executive Vice Chairman of the Commission, Prof. Umar Danbatta had earlier in his opening speech told the audience that the public enquiry was meant to gather informed contributions from stakeholders that would lead the Commission to take decisions  consistent with  its mandate to create an enabling environment for effective competition in the industry. “AS you may be aware, the demand for spectrum has increased due to emergence of disruptive innovations such as Mobile broadband, web Applications, Cloud Computing Internet of Things (IoT) and the proliferation of smart devices amongst others.Consequently, in order to reap the benefits of effective utilization of spectrum as well as improve operational efficiency and regulatory excellence, the Commission in accordance with    its mandate as    enshrined in the Nigerian Communications Act (NCA) 2003 embarked on re-planning of some of the its frequency bands.In line with the spirit of participatory regulation and the strategic objective of the Commission to hold regular consultation with  industry stakeholders, the Commission has decided to hold a public enquiry to elicit inputs and comments from stakeholders to enable us draw important and beneficial contributions from your wealth of experience and research”, he said.


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