October 15, 2021

On 5G the world will be watching Nigeria


By Okoh Aihe

THE process of licencing 5G technology began in Nigeria last week with the upload of the Information Memorandum, IM, on the website of the Nigerian Communications Commission, NCC, The NCC is the regulator of the telecommunications industry and the law, among other functions, empowers it to licence operators to do business in the industry.

Apart from some little specks of contradiction here and there, the 80-page document makes a compelling case for investment in the country’s telecommunications ecosystem. All of a sudden showers of deja vu poured all over me; it’s like the commission has gone in search of pristine ways to rekindle an industry whose members were going to sleep.

By the document the commission may be trying to demonstrate that it was returning to the primordial purity in licencing which earned it an international name that has largely been sullied by this administration. Key facts stand out in the document.

The commission is offering two lots of 100 MHz each in the 3.5 GHz band ranging from 3500-3600 MHz and 3700 to 3800 MHz for auction. Meaning that no matter the number of bidders that may feature at the auction, only two of them will get the licence. And that is quite steep, shrewd and strategic.

The Generic Reserve Price, GR, for one lot of 100 MHz is valued at one hundred and ninety seven million and four hundred thousand United States Dollars (US$197,400,000) or its equivalent in naira at the prevailing Central Bank of Nigeria, CBN, rates at the time of the auction.

The GR is the minimum price at which a lot shall be sold. The GR is the takeoff point which clearly illustrates that what the NCC is cooking with the auction is a game of giants where the lily-livered don’t have to step on the pitch at all.

The spectrum lot won by each bidder will be assigned on a nationwide basis covering all the states of the federation and the Federal Capital Territory, FCT, according to the document. But a little twist or addition here.

Where a winner does not hold a Unified Access Service Licence, UASL, which is the operational licence for the frequency spectrum slated for auction, it will be issued at an additional fee of Three hundred and seventy-four million, six hundred thousand naira only (N374, 600,000) or at the subsisting licence fee at the time of the auction. There are already about eight UASL licences out there. Oh, what a little advantage to be enjoyed by industry pioneer operators!

It reads so well to see Nigeria in summary. “Nigeria has an estimated population of 214 million, with an average growth rate of 2.6 per cent annually. Approximately 76.46 per cent of the population is under the age of 35. In line with these demographic changes, internet penetration grew from three per cent in 2004 to 74.2 per cent as at April, 2021 and broadband penetration increased from less than 10 per cent in 2015 to 40.66 per cent in April, 2021.”

There are currently five major mobile licencees in Nigeria: Airtel Networks Limited, Airtel; Emerging Markets Telecommunications Services Limited, EMTS (trading as 9Mobile); Globacom Limited, Glo; NATCOMS Development Investment Limited, (trading as Ntel), and MTN Nigeria Communications PLC, MTN. This is in addition to several other service providers offering fixed and wireless broadband services.

In spite of present position, this race starts afresh. Every interested bidder must have its application submitted by November 24, 2021. The application must be submitted with an Intention to Bid, IBD, which is 10 per cent of the reserved price.  Auction holds on December 13, 2021.

It will be an ascending clock auction, meaning the process will continue until only the deep pockets are hanging at the peak of the skyscraper. But having succeeded at the auction, the entire licence fee, less 10 per cent reserve price, must be paid fully by January 26, 2022.

But let’s re-examine this beautiful story laced with a lot of optimism. Making his independent day speech, the President, Muhammadu Buhari, promised to pull a 100million Nigerians out of poverty before the end of his administration, which is less than two years. The fall out from this is that of the remaining population of over 100m, only about 60 per cent may be the addressable market that the regulator is talking about.

That is one bleak spot when looking at the entire picture. The bright side is that the coming of 5G technology can actually contribute immeasurably to rebuilding and re-calibrating the economy, thus actually making it possible for the new technology to explode growth in the economy through youth participation and other citizen mobilisation.

Technology may actually provide the magic wand to perform the miracle which President Buhari spoke about. Because, in truth, trying to pull a 100m out of poverty in less than two years is nothing but a miracle; it’s like trying to climb the walls of Burj Khalifa in Dubai without requisite skills.

One other thing that troubles me is the Generic Reserve Price, GR, of one hundred and ninety-seven million and four hundred thousand United States Dollars (US$197,400,000). For a country in visible economic trouble for which every naira and dollar counts, there shouldn’t be the impression that the focus of the auction is to raise money.

Unfortunately that impression is already in the wind, which may lead to some kind of subtle pressure on the bidders to go some more distance irrespective of the economic reality. But I doubt if any magic can happen for the obvious reasons that there is palpable insecurity in the land, and next year is an election year, which could make the economy and socio-politico outlook more tense and unpredictable, a situation that could frighten investors. However, emphasis should be on 5G rollout for development and not cash generation to feed a panting economy.

The 5G auction is one of the last opportunities for this government to prove it can handle a delicate process without throwing sand into it. Having initiated the policy through the Ministry of Communications and Digital Economy, the government should stay far away from the auction and allow the NCC to do its job. Hall of fame, for me, is better than hall of infamy. The government can make its choice. But whatever choice, the world will be keeping an eye on Nigeria.