December 14, 2022

For 5G, little lessons that build an industry


By Okoh Aihe

WHAT seemed a miscarriage of reality last year was righted last week when mobile service provider, Airtel, became the sole contender in a 5G auction scheduled for this month. As the sole bidder, Airtel will now shell out the sum of $273.6 million as payment for a lot of 100 MHz in the 3.5 GHz spectrum band.

A statement released by the Commission through the Director of Public Affairs, Reuben Muoka, informed that while only two companies had expressed interest in the auction by the close of business on Monday, December 5, 2022, only Airtel was able to pay the Intention to Bid Deposit, IBD, which is 10 per cent of the Reserve Price, RP.

The other company, Standard Network & Connections Limited (Standard Network), had communicated with the Commission via an email, appealing for the deadline to be extended by 12 working days, which was not acceptable in view of the auction timetable. “Having met all the provisions in the IM, Airtel has therefore emerged as the sole bidder,” Muoka said.  

How times and fortunes change! The first 5G auction was held in Nigeria last year, with MTN and a little-known company called MAFAB emerging as the winners, each paying $273.6 million for a 100-MHz lot. Airtel posted an exit Bid of $270m. This writer gathered at the time that the Nigerian Communications Commission, NCC, the telecoms’ regulator which sold the licences on behalf of the Nigerian government, had given a firm word that there would be no 5G auctions for two years. 

After all, the financial windfall was good and those dropping such hefty sums needed to be reassured that the system would keep their back and ensure they make some returns on their investments that would eventually run into the billions because of the cost of 5G deployment. But as a band of politicians readies to exit government in the next few months, pressure came on the regulator to put the remaining two lots in the market with the narrow excuse that so much money could be raised for a government in dire need of cash. 

The drama began with the information memorandum published on October 21, 2022. Stakeholders were encouraged to raise questions and comments on the Memorandum. Some of the concerns were expressed at the Stakeholders Engagement Forum on November 15, 2022.

While Airtel argued to be allowed to pay the RP, MTN canvassed a position that it be allowed to participate in the auction, although it currently holds a licence. Definite decisions. Airtel’s wish was refused. The window of 100 MHz as the upper limit for an operator was adjusted to 200 MHz, meaning MTN could participate and that even a bidder could snap up the two lots. 

These are interesting times. This writer has a little conservatism on his side, spiced with some regulatory experience. This was why we warned that the auction be suspended for the following reasons: the election period would breed some uncertainties to frighten investors, the regulator needed to be firm and not yield to the greed and manipulation of politicians, the regulator should not break its promise to previous winners or even industry operators, and the industry and its investment needed to be protected.

This was only a suggestion that was contemptuously ignored. Not that we expected otherwise. There is always a feeling that we can conjure up magic to impact on our wishes and designs. Unfortunately, magic belongs to the realm of deceit; oh, the ambience of abracadabra. 

As a result, ironies conspired to derail the plans. MTN froze on its plans, perhaps taking a cautionary appraisal of the market it has invested so much in, Airtel had its way to pay the Reserve Price, RP, while the little other outfit that had interest couldn’t survive the heat of an unpredictable market. Nobody would be ready to lay out that kind of money to an upstart in an industry where sharks could be considered friends. 

Generally, interests cooled in the industry because there are things that are not right at the moment. The drama ended before it could start. No climax. No classic dénouement. A simple slapstick. But what lessons have we learnt from this insipid episode? 

Airtel attracts my first attention here. The company should build some more trust in the countries where it is doing business. Each time there are spectrum sales in Nigeria, the service provider behaves like an organisation frozen in time, not making too much effort to hit the glass ceiling. 

However, Bharti Airtel’s parent company had to pay $5.45 billion for 5G spectrum in India in August 2022 before it could begin to place a value on the low-cost product it declined to select in Nigeria. This writer was reliably informed that plus the unwholesome pressure from the politicians, Airtel, since then, has mounted pressure on the regulator. Unfortunately for the operator, which has now won a 5G licence in Nigeria, it is one year behind its competitor, MTN, in service rollout. 

I also want to point the finger at the operators and industry bodies that are ever so afraid of testing the activities of the regulator with available regulatory instruments. There is too much silence, too much acquiescence to regulatory inconsistencies and infractions from the regulator. You don’t build a big industry that way. My last appeal is to the regulator. 

Beyond the adulation-spewing sloganeering of best practices and regulatory transparency, there will be a need to audit its activities over the past seven years, highlight its successes, but also be honest enough to look at its failures and make corrections that can revive the industry’s fortunes.I do not want to submit that there is too much focus on legacy glory, but the path to a great future is always missed by those who constantly look behind. 

At the expiration of the lifespan of the Buhari administration, the regulator will have to do a lot of work to clean up its image and reinvent its activities. Meanwhile, congratulations to Airtel, and may their service rollout come quickly.