Eugene-Juwah2

2.3GHz Spectrum: Bitflux Edges Out Glo In Flawed Auction

| 4 Comments

Bitflux Communications Nigeria Limited bid $23.25million to win the 2.3GHz frequency spectrum offered by the National Communications Commission (NCC) on behalf of the Federal Government for broadband Internet services.

In an auction conducted by the NCC at the Transcorp Hilton Hotel, Abuja, Bitflux offered $23, 251,000 ahead of Globacom’s $23,050,001 to win the bid. NCC had a reserve price of $23m.

The development came just as the group chief operating officer of Globacom, Mohammed Jameel, congratulated Biflux but said his company “felt the price of placed on the spectrum was too high for its worth and also too high for our business plan. Our business model does not support such high price, compared to those we have bid for and won in the past.”

Bitflux is a consortium of three companies including VDT, BitCom and Superflex while Globacom is Nigeria’s second largest mobile operator. The two companies emerged finalists for the auction bid out of 27 others, who expressed interest in the licence auction, having met all laid-down qualification criteria including the payment of the mandatory and non-refundable $2.3 million to the Commission, which represents 10 per cent of the reserve price.

The auction, which was computer-based, employed what NCC called an ‘Ascending Clock Auction approach’, where the amount to bid moves up from the reserve price, as the bidding process continues. As such, there was a mark-up of 15 per cent over the $23 billion reserve price, making the auction price to start from $26.4 million yesterday.

In the first round of the suspense-filled auction, which lasted about 15 minutes, none of the two firms, put in separate rooms and stripped of all communications gadgets, bid anything. This was an indication that the $26.4 million set for the NCC was considered too high for either of bidders.
This development led to the second stage called ‘Tie Breakers’, where the bidders were asked to “entre a bid price above or equal to $23 million reserve price and below the $26.4 million” mark-up price. It was at this stage that Bitflux out bided Globacom with its bid of $23.25 million, emerging as winner.
Speaking after winning the bid, Bitflux, led by one its directors, Mr. Biodun Omoniyi, who is also the managing director of VDT Communications, the largest indigenous fibre optic and copper infrastructure provider, said the bid was transparently done and the company was afraid that Globacom’s weight in the telecom industry would make the bid difficult for it (Bitflux) to win.

Announcing the bid result, the Executive Vice Chairman, NCC, Dr. Eugene Juwah, said “With the bid price of $23.25 million bid by Bitflux, which is above what Glo offered, Bitfflux has won the one slot of 30Mhz of the 2.3GHz spectrum auction.” He said with the Bitflux has also become a ‘forerunner of broadband revolution’ in Nigeria.

Minister of Communication Technology, Mrs. Omobola Johnson, represented by the permanent secretary in the ministry, Mr. Tunji Olaopa, said the licensing of the spectrum would help in accelerating the 30 per cent broadband penetration target by 2017, as set out in the country’s National Broadband Plan.
But some industry watchers have expressed concern over the credibility of the bid process given that only two bidders emerged for such a lucrative frequency spectrum. The auction was expected to be most keenly contested since the auction of the Digital Mobile Licence (DML) in January 2001 that made the way for the emergence of the GSM telecoms operators. Even the House of Representatives waded into the matter as it resolved earlier this month to review the pre-qualification criteria for companies that want to participate in the auction.
Other companies such as Zinox Telecommunications, a mobile arm of the Zinox Group, Airtel, MTN, Etisalat, Mobitel, Main One and Spectranet pulled out of the bid process for different reasons.
The Corporate Communications Adviser to Zinox Telecoms, Mr. Uche Nnadozie, had reportedly said that the company’s board made “a last minute decision” to withdraw from the bid because it wants to remain in its area of core competence.
Also, Airtel’s Chief Executive Officer, Mr. Segun Ogunsanya, said the company withdrew from the bid because it wants to wait for the 700MHz spectrum of digital dividend that would be available to operators in Nigeria next year after migration from analogue to digital broadcasting must have been successfully implemented.

Stay up to date, follow us on Twitter; @LeadershipNGA

  • Julius Ogar

    Reading through your story: “2.3GHz Spectrum: Bitlux Edges Out Glo in Flawed Auction”, one is at a loss as to where and when the “flaw” occurs. There is no clearly stated action (or inaction) that indicates that the integrity of the process was compromised and by whom.
    The story which is detailed and so far the most elaborate newspaper account of the event, clearly shows that companies like Zinox and Airtel who had withdrawn their bids, did so for reasons connected with these companies’ re-evaluation of their priorities than with the integrity of the auction. They therefore, did not even participate in it. Even Globacom, which lost out has congratulated the winner and has not raised alarm about any flaws in the aution.
    One is therefore compelled to ask if this is one instance of a misleading headline or whether there is any subterranean motive in the background.

  • McDonald Koiki

    After going through this story I am yet to find where the “flaw” is, perhaps it’s in the mind of the Leadership reporter. NCC has done a good job, but it seems we are so used to bad news that reporters have to invent flaws where there are none. Significantly, NCC had been making a lot of media noise that the criteria for the auction were on its website and the general public will check the parameters. Amazingly, it appears that Leadership reporters are too lazy to check fact that are in the public domain. As far as I am concerned, NCC has done well and should be commended for a transparent exercise.

  • Funke Lawal

    Looking at the story, this reporter is just trying to be mischievous because, the difference between the offers of these two bidders are not much, so I wonder why someone would use this word “flawed” to describe a situation like this. As my hairdresser would say, why is Leadership taking panadol for a non existent headache?

  • Denzon E. Oluwagbamila

    This article is interesting to read. However, there is absolutely nothing to suggest that the auction was ‘flawed’ as the writers would want a gullible mind to conclude.
    Inasmuch as I personally would have loved Globacom (the indigenous
    network that shattered MTN’s monopoly) to win the bid, it is glaring
    even from your own analysis and Globacom’s acceptance of ‘defeat’ that
    the bidding process and its conduct were open, free and fair. After
    all, all what we Nigerians desire is to let the due process be followed
    (and that has taken place) and for the NCC to make sure that Bitflux diligently do the right thing. As for the writers, it seems to me that you indirectly but deliberately want to run down the organisers by putting up a negative headline on a story that all the participants in the bid did not at all fault.

Related Articles

Daily Columns