Following the successful auction of two lots of 100Mhz in the 3.5GHz spectrum for the deployment of the Fifth Generation (5G) network in Nigeria, both winners, losers and telecommunications industry stakeholders have applauded the Nigerian Communications Commission (NCC) for conducting a transparent auction which raised $573.92 million (N237.29 billion).
The commission had on Monday December 13th, 2021 at the Transcorp Hilton Hotel, Abuja held an auction that lasted nine hours and peaked at the eleventh round with the emergence of MTN Nigeria Plc and Mafab Communications Limited as provisional winners.
MTN, Airtel and Mafab Communications Limited had qualified for the auction, having met the requirements stipulated in the Information Memorandum (IM) for the spectrum auction. They had earlier participated in a mock auction held on Friday, December 10, 2021, which served as a precursor to the Main Auction.
The 3.5GHz spectrum auction was conducted by the NCC in collaboration with the Federal Ministry of Communications and Digital Economy using the Ascending Clock Auction System. The preferred winners are expected to pay the sum of $273, 600.000 each for 100MHz lot in addition to $15.6 million and $11.120 million for Assigned Spectrum for MTN and Mafab respectively.
Airtel Commends NCC
Airtel which posted at Exit Bid of $270 million and withdrew at the 11th round has through its group chief executive officer of Airtel Africa, Mr. Segun Ogunsanya, commended the Nigerian Communications Commission (NCC) for a transparent 5G auction completed on December 13, 2021.
Ogunsanya confirmed that the Nigerian subsidiary of the company pulled out of the auction after submitting its final bid of $270 million. According to the Airtel Africa CEO, “The business case for 5G across all sub-Saharan markets is evolving, and we remain committed to driving broadband capacity in our various markets.
“We will continue to closely track the 5G ecosystem over the next several years, in particular the availability of affordable 5G devices and relevant use cases. Airtel Africa retains ample capacity, spread across various spectrum bands, in Nigeria and its other markets, to continue to meet the growing data demands of our customers for many years to come, with several potential routes available to the business to deliver even greater capacities, cost effectively, in the long run”.
MTN Thumps Up NCC
MTN Nigeria also thumped up the NCC after it successfully acquired one of the two 100MHZ spectrum licences in the 3.5GHz spectrum band auctioned by the commission, saying “this is a significant step towards achieving the goals of the Nigerian National Broadband Plan (2020-25). Acquisition of the spectrum will enable the rollout of 5G services to MTN Nigeria’s customers.”
Fifth generation (5G) mobile network technology offers faster data speeds and lower latency. It allows several devices to be connected at one go and creates vast possibilities in innovation and transformation. 5G will enable seamless communication and interconnectivity between smart devices, a process commonly called the internet of things. It has the potential to accelerate the digital transformation of industries.
Commenting on the outcome, MTN Nigeria CEO Karl Toriola said: “5G is the future of network technology and offers incredible possibilities for new and enhanced services for our customers. Our successful bid presents an opportunity to be at the forefront of delivering these technological advancements to as many Nigerians as possible.
“The benefits of 5G are multi-faceted, and they hold the key to unlocking new avenues for the nation’s growth and development. It is far more than high-speed internet or faster-streaming speeds; 5G has implications for improved service delivery across every sector. It has the potential to transform our nation’s economy and make a difference in the daily lives of every Nigerian. We thank the NCC for organising a transparent auction which will transport us into the ‘tomorrow’ we desire,” he said.
Toriola further said, “The auction could not have come at a better time as we count down the last few hours to the close of the MTN Group’s ongoing offer for sale of shares in MTN Nigeria. We encourage anyone who has not yet subscribed to the offer to visit www.mtnonline.com/po and use one of the channels available to apply.”
ATCON Says Bid Competitive, Lists Expectations
Meanwhile, the president of the Association of Telecommunications Companies of Nigeria (ATCON), engineer Ike Nnamani who led his team to observe the auction process, said “The auction was a great success and very transparent. It was professionally conducted and I am glad it went well. I rate the whole process extremely high.
“It was very competitive till the end when one of the bidders submitted its exit bid and the two remaining bidders were declared winners. I am sure other countries copy the process adopted by the NCC due to the efficiency and transparency of the process.”
Elaborating further on his expectations, he said, “As ATCON president, I look forward to a rapid implementation of the 5G services in Nigeria. It is my expectation that the winners will abide and even surpass the implementation targets that was stipulated in the Information Memorandum so 5G can be prevalent across the country within few years.
“Next generation telecom services that will enhance the digital economy will be available to Nigerians once 5G is rolled out in Nigeria. This will create jobs, lead to economic development, and improve the quality of life of Nigerians,” Nnamani added.
The Auction Rounds
Before the action commenced, the commission had fixed the Reserve Price at $197.4 million. In the first Round of the auction, the bid price was fixed at $199,374,000.00; $201,367,740.00 at second Round; $204,388,356.10 at third Round; $209,407,962.50 at fourth Round and $215,782,901.30 at the fifth Round.
The auction prices increased progressively to $224,414,217.43 at the Sixth Round; $231,146,643.96 at the seventh Round; $240, 392,509.71 at the eighth Round; $251, 210,172.65 at the ninth Round; and $263,700,050.00 at the Round 10 of the auction exercise. The auction process reached its peak at Round 11 when the bid price graduated to $275,904,886.25 with all the three bidders still actively participating.
The Main Stage of the Auction, however, ended at the conclusion of the 11th Round, with Airtel listing an exit bid of $270,000,000, while MTN posted an exit bid of $273,000,000, giving way to the Assignment Stage. At this point, Airtel had dropped off from the race having posted a lower exit bid, thus leaving Mafab and MTN as winners of the two available lots.
The EVC Statement
Announcing the results of the auction exercise, the executive vice chairman of NCC and auction overseer, Prof. Umar Garba Danbatta, recalled the processes and activities leading to the successful conduct of the auction. He said that the NCC published a public notice on its decision to award two lots of 100 megahertz (MHz) Time Division Duplex (TDD) available in the 3.5 GHz band through an auction process to support the delivery of ubiquitous broadband services for the deployment of 5G network in Nigeria.
“Subsequently, an Information Memorandum was issued on November 10, 2021, in which Bid applications for the available spectrum lots were invited. By the deadline for receipt of applications on November 29, 2021, the Commission received applications from three licensed telecoms companies, viz: Airtel Networks Limited, Mafab Communications Limited and MTN Communications Nigeria Limited,” he said.
“The auction held successfully today, Monday December 13, 2021 at the Transcorp Hilton Hotel, Abuja with the three bidders competing for the available two slots. The Commission adopted the Ascending Clock Auction format which ended after Round 11 and proceeded to the Assignment Stage. It is my pleasure to announce that at the end of the auction, Mafab Communications Limited and MTN Communications Nigeria Limited emerged as provisional licence winners,” he said.
Arising from the above, Danbatta said that the winning bid price for the auction was $273,600,000 for each lot of 100 MHz TDD and the provisional winners are expected to pay the Winning Bid price, less the Intention-to-Bid Deposit, by February 24, 2022.
“MTN Communications Nigeria Plc made an offer of $15,900,000 for the assignment of a preferred Lot, while Mafab Communications Limited made an offer of $11,120,000 for a preferred Lot. Thence, MTN Communications Nigeria Plc, having made the highest offer was given the right to select its most preferred Lot and it selected Lot 1 (3500-3600 MHz), while Lot 2 (3700-3800 MHz) is consequentially assigned to Mafab Communications Limited at no extra cost,” the EVC said.
He expressed satisfaction that the auction process was efficient, fair, credible, well-organised and transparent and was designed to deliver the ideal outcome saying the strongest bidders have emerged provisional winners, raising a substantial amount for the federal government.
He also thanking the federal government for its support and commitment to the deployment of 5G technology in Nigeria, which, he said, will bring substantial network improvements, including higher connection speed, mobility and capacity as well as low-latency capabilities to communications services in Nigeria.
The EVC thanked all stakeholders, who have contributed to the success of the auction process, saying the huge investment that will accrue from the sales of the spectrum band auctioned will result in increased transformation in life and businesses.
Earlier in his remarks, the chairman, Board of Commissioners, NCC, Prof. Adeolu Akande thanked the bidders for believing in the Nigerian communications sector by their willingness to invest millions of dollars in the sector for the provision of 5G services, noting that NCC was committed to transparency and openness, which the auction represents.