2.6GHz spectrum auction: Not good omen for Nigeria’s telecoms sector

Though the Nigerian Communications Commission (NCC) attributed the delay in the auction of the nation’s 2.6GHz spectrum to the fact that only one operator indicated interest in it, analysts have blamed it on uncoordinated regulation. But the NCC has said it would review the spectrum sale. Attempts by the NCC to auction the spectrum which […]

Though the Nigerian Communications Commission (NCC) attributed the delay in the auction of the nation’s 2.6GHz spectrum to the fact that only one operator indicated interest in it, analysts have blamed it on uncoordinated regulation. But the NCC has said it would review the spectrum sale.
Attempts by the NCC to auction the spectrum which was to fetch federal government a minimum of $224 million (about N45billion) had failed on three consecutive occasions, a development industry analysts described as bad omen for the sector because the spectrum is tagged to the realization of Federal Government target of 30 percent national broadband coverage by 2018.
In 2014, NCC announced the sale of the 2.6GHz spectrum and the auction was to take place in December 2014. However, a month before the auction date, the Federal Government said it was postponing the sale of the spectrum till a more suitable date.
Also, in March 2015, NCC postponed the auctioning of this same spectrum for the second time till further notice. This further frustrated the plans of prospective bidders who were looking forward to deepening their investments in broadband services in Nigeria.
Again, stakeholders were shocked last month, when the auction failed to hold on May 16 as announced by the NCC at an interactive session in April on the planned 2.6GHz sale held Lagos.
Companies like Zinox Technologies, MTN, Globacom and others who had previously bided for spectrum auctioned by the commission kept quiet about their intentions this time.
The qualified bidder expressed an interest to bid for six lots out of the 14 lots on offer and paid the bid deposit as specified by the Information Memorandum on the auction, said the Director of Public Affairs at NCC, Mr. Tony Ojobo in a statement.
He said: “Therefore, the need for an auction event no longer arose as the IM, stated that ‘If the aggregate demand from approved bidders is less than, or equal to the number of lots on offer, the commission will provisionally award the license to the party/parties at the reserve price”.
Consequently, the commission is currently undertaking a due diligence with a view to issuing a letter of award of license for the cumulative 30MHz in the 2.6GHz frequency, Ojobo said, adding that upon approval, the qualified bidder will be required to pay a total $96 million (about N19bn)for the license.
The 2.6 GHz band, which spans from 2.5 GHz band to 2.7 GHz band, covers the frequency range between 2500-2690 MHz, although there are some minor national variations among countries in the use of the frequency band.
Analysts said the low turnout of investors for the sale of the 2.6 GHz frequency spectrum may not be unconnected with the instability atmosphere in the industry citing failure of NCC to resolve various challenges confronting the operators.
Stakeholders had attributed investors’ doubt to the regulatory failure to resolve the controversial N780 billion fine against MTN Nigeria on time. Though the issue was resolved last week, they said it ought to have been resolved long ago.
The Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engr Gbenga Adebayo, had expressed reservation over the fine issue at the beginning, appealing to the NCC not to drive investors away with such heavy fine.
According to him, nowhere in the world has such fine ever been slammed on any operator.
Also, the immediate past national president of the Association of Telecommunications Companies of Nigeria (ATCON), Engr. Lanre Ajayi raised concern about the handling of the fine.
Ajayi who expressed regret over the poor handling of the issue and the politicisation were based on emotion and not on the objectives of the fine.
He said: “While some see it as an opportunity to make quick money by offering all sorts of services, legal, lobbyist, etc, some politicians and public officers see it as an opportunity to show off the importance of their offices without an iota of consideration for the purpose of the fine and the impact its mishandling can have on the telecoms industry and the Nigeria economy at large.”
Another industry observer, who pleaded anonymity, said: “I can tell you categorically that no investor would like to put his money in an unstable market where every situation is politicized. Believe me, the MTN fine is a major setback for this sector because it has scared some investors away.”
He said with the many challenges of doing business in Nigeria, some investors keep struggling to survive with the risks and such fine was slammed against an operator.
He noted that, “Do you think such operator would want to invest more? Impact of such could not be farfetched from low bidding for 2.6GHz.”