Nigeria’s second national telecoms carrier, Globacom, may emerge winner of 2.3GHz spectrum auction in two days time, even as the race for the wholesale broadband service licence seems to be an unequal match.
The Nigerian Communications Commission (NCC), which is midwifing the frequency spectrum sale, had earlier announced that Globacom, the Second National Operator (SNO) owned by business tycoon, Mike Adenuga Jnr, would be pitted against little-known Bitflux Communications. Both firms have been pre-qualified by the regulator as approved bidders for the two-day spectrum auction.
According to the telecoms regulator, the frequency spectrum auction is expected to take place in Abuja on February 19 and 20, 2014, in line with the terms of the Information Memorandum (IM) published on the 2.3GHz Spectrum Auction.
Little is known about Bitflux Communications, but an unconfirmed report suggests that the firm is being promoted by Biodun Omoniyi, managing director/CEO, VDT Communications, a Lagos-based broadband service provider.
Globacom has been tipped by analysts as clear favourite to win the spectrum auction due to its owners’ deep pocket. Mike Adenuga, the reclusive tycoon, has built a fortune in mobile telecoms and oil production. He launched Globacom, Nigeria’s carrier, in 2006. The firm currently has some 24.1 million customers. The firm also operates in the Republic of Benin and Ghana and very recently acquired licence to operate in Ivory Coast.
Nigeria’s second-richest man made a $450 million bid to purchase Nigeria Telecommunications Limited (NITEL), the defunct government-owned telecoms firm, in July 2011.
The deal, however, did not fall through. As at 2012, Mike Adenuga Jnr had a net worth of $4.6 billion.
There are three operators currently providing data services on the 2.3GHz band. The internet operators are Spectranet, Direct on PC (DoPC) and Mobitel. These service providers, however, operate with a 20MHz bandwidth. These frequency spectrum licences were awarded in 2009 except for DoPC that was awarded in 2006. The Federal Government, through the NCC, had placed a reserve price of N3.6 billion for the remaining 30MHz of 2.3Ghz spectrum sale.
A reserve price represents the minimum amount an item is on offer for in an auction.
According to the commission, on completion of the auction process, it would issue a 10-year spectrum licence and Wholesale Wireless Access Service Licence (WWASL).
The WWASL Operational Licence will attract an additional fee of N155 million, which must be paid by the winner that does not currently hold a Unified Access Service Licence (UASL), bringing the minimum payment expected from this set of bidders to N3.75 billion if they eventually win the bid. This rule precludes MTN, Globacom, Airtel and Etisalat, which already hold UASLs.
The telecoms market’s focus, according to industry analysts, is shifting from voice to internet and data services, which are of high value for business, education, healthcare, social and entertainment purposes.
By bidding for the 2.3 GHz licence, industry analysts say, Globacom is positioning itself to become the dominant player in the data segment of Nigeria’s highly competitive telecommunications market. With the resource, Globacom, according to them, can now provide affordable broadband services to a broader spectrum of the population.
As at October 2013, MTN had a strong foothold on Nigeria’s internet market with 29.3 million users, according to data from the NCC. Globacom, on the other hand, has 13.2 million data subscriptions, while Airtel and Etisalat had 9.6 million and 5.6 million internet users, respectively.
“We have made significant investment in our Glo-1 submarine cable which is currently providing high speed international connectivity across the country. The 2.3GHz spectrum, if we get it, will complement this investment and put us on the path to becoming a leader in the provision of data services,” said a senior director at Globacom, who pleaded anonymity because he was not authorised to speak.
The firm has invested about $900 million in 14,000km submarine cable.
BusinessDay sought to get more clarification on Bitflux Communications, but a director at the NCC they did not really know the details of the companies, but that there was an auction committee in charge.
“We are allowing the process move strictly as the IM prescribes without us talking above or below the process. So bear with us for not providing such information,” said the director, who does not want to be named.
The proposed licensing of 2.3GHz spectrum has been influenced by the need to provide retail internet service providers (ISPs) and other users with the requisite wholesale wireless access and bandwidth to provide services to their subscribers in consonance with the National Broadband Plan of 2013. The scale and growth of the Nigerian communications sector since the market’s liberalisation makes this auction a unique investment opportunity.
By: Ben Uzor Jr
