By: Ben Uzor Jr
The race to meet the Federal Government’s target of 30 percent broadband penetration in Nigeria over the next four years, has begun in earnest. Four telecommunications operators, including underwater cable operator, MainOne, Visafone Communications, South Africa’s MTN, and United Arab Emirates (UAE’s) Etisalat, have declared interest in bidding for new licenses under the Nigerian Communications Commission’s (NCC) new broadband market structure. This development is coming on the heels of reports that the Federal Government, through the NCC had placed a minimum offer price of N3.6 billion on a license for the sole provider of wholesale broadband services in Nigeria, expected to be sold next year in a fresh round of spectrum auctions.
It was reported that a reserve price, which represents the minimum amount an item is on offer in an auction, has been fixed at N3,673,100,000 ($32million) for the 30MHz of 2.3Ghz frequency spectrum sale scheduled to be concluded by Q1 2014. The winner of the single 2.3 GHz spectrum will become the sole wholesale provider of broadband services to other service providers in Nigeria. Eugene Juwah, executive vice chairman, NCC, had told a telecoms forum in Lagos recently that the Information Memorandum (IM) for the race was billed to be released in no distant time. This fresh round of licensing, according to the regulator, would also give birth to seven regionally based InfraCos, in line with its proposed new broadband market structure.
Informed sources told BusinessDay, weekend, that Visafone, Etisalat and MTN Nigeria are interested in becoming wholesale wireless providers, whilst MainOne is setting its sights on the InfraCo license. For quite some time, Etisalat has been clamouring for additional spectrum to roll out innovative broadband services. "We want the regulator to award the license to the four large telcos, with the needed scale, who can engineer that spectrum in order to support the growth and the demand for mobile broadband service", Matthew Willsher, Acting CEO, Etisalat Nigeria, said at a telecoms forum in Lagos. Insiders say Etisalat is aware of the immense opportunities of the new market structure, considering that it is a late entrant in Nigeria’s telecoms market.
The boards of these companies, our sources say, have cut short their holiday break to strategise on the best possible way to approach this in view of the inherent complexities in the licensing requirement, specifically in the area of ownership structure. According to the NCC, "This broadband market structure will ensure vibrancy in the market and prevent dominance, as no company will be allowed to play in more than two of the service layers and the equity participation in bidding consortium for the licenses will be controlled." The InfraCos are firms that will assist in the deployment of critical Information and Communication Technology (ICT) infrastructures in all the six-geopolitical zones of the country, towards accelerating broadband services deployment.
By virtue of the NCC’s new broadband market structure, which seeks to achieve the objective of a nationwide metropolitan and backbone fibre deployment on an open access, non-discriminatory, price regulated basis, the wholesale wireless provider will interconnect with the InfraCo at their Points of Access (PoA). This, according to the regulator, would create an integrated broadband service nationwide to home, hospitals, public and private institutions as well as businesses. "It is an option that would support our 4G rollout plans. Yes, we are interested but we is evaluating the option and when the time comes we will definitely take the right decision", Srinivasa KV, chief executive officer (CEO) of Visafone Communications Limited, told BusinessDay in an interview.
"We would look at getting licenses for InfraCos, perhaps more than one, depending on the scope of the eventual framework that the NCC decides to implement", Funke Opeke, CEO, MainOne, a local ICT firm, told BusinessDay in an interview. "We are interest in acquiring 30MHz spectrum but we implore the NCC to remain intensely focused on creating a friendly operational environment for ICT infrastructure in Nigeria", said a senior executive at MTN, who pleaded anonymity because he was not authorised to speak on the issue. A copy of the IM obtained by Technology Times, revealed that interested bidders are expected to pay the sum of N367, 310,000 ($2.3m), which represents 10 percent of the reserve price for the license and also the Intention to Bid Document (IBD), the deposit payment required to be made by all applicants as part of the pre-qualification process, the rule stated.
"The IBD is a commitment from the Applicant to pay at least the Reserve Price for the license, as specified in this IM, and to participate in the Auction process", the NCC said, adding that the cleared funds must have reached the designated transaction account with the Central Bank of Nigeria (CBN) not later than 17.00 hours (NT) on February 7th, 2014. The planned auctions will be an all comers affair, as companies that are duly registered in Nigeria can participate once they can shell out the stipulated funds and meet other pre-qualification requirements. On the other hand, even though existing telecoms companies are not excluded from the auctions, they are expected to scale stiffer pre-qualification conditions.
"Already licensed operators participating in the process must fulfill all existing obligations to the Commission including payments of Annual Operational Levy, Spectrum and National Numbering Plan fees, prior to prequalification", according to the telecoms umpire. The NCC is issuing the last 2.3GHz in the upcoming bids as three other companies have hitherto been awarded similar spectrum to deliver Internet service to end users, the auction plans states. "There are three operators providing data services on the 2.3GHz band. The operators are Spectranet, Direct on PC (DoPC) and Mobitel. They currently operate with a 20MHz bandwidth. These licenses were awarded in 2009 except for DoPC that was awarded in 2006, the regulator said, underscoring that despite these, the Nigerian broadband market stakes remain attractive for a new wholesale service provider.
Source: Businessday
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