Some initial analyses on the 3.5GHz Spectrum Auction, which produced MTN and Mafab as winners last week revolved around the fate of other telecoms operators, and the transfer of additional costs to telecom subscribers, whereas emerging narratives from informed industry watchers say time for subscribers to get value for their money is here.
With the successful completion of the much-advertised 3.5GHz Spectrum auction conducted by the Nigerian Communications Commission (NCC) last week, stakeholders in the nation’s telecommunications industry have singled out telecoms subscribers as the major gainers of the business transaction.
If the narrative pushed out by the leadership of the umbrella body for the nation’s telecoms operators, the Association of Licensed Telecoms Operators of Nigeria is anything to rely upon, then the auction that fetched the federal government $563 million will not bring additional burden to telecom users although there were initial fears that the telecoms firms would not hesitate to pass the burden of the payment to their consumers.
The Auction
The auction, which was conducted at the Transcorp Hilton Hotel, Abuja, and virtually, saw the third bidder, Airtel Nigeria, crashing out along the way, leaving MTN Nigeria and Mafab Communication Limited to grab the two slots available.
A breakdown of the federal government’s earnings from the auction showed that it raked in a total of $547.2 million as MTN and Mafab emerged winners of the keenly contested 3.5 GHz spectrum auction for 5G deployment in the country by paying $273.6 million each.
In addition, MTN had paid $15,900,000 to get lot one of the spectrum, while Mafab paid an additional $11,120,000 million to get lot two.
Each of the bidders had initially paid N7. 5 billion to qualify for the bidding, which was a 10 per cent non-refundable deposit of the N750 billion ($197.4 million).
The three bidders were in the contest for two slots of 100MHz each in the 3.5GHz spectrum licence, and each bidder contested for one lot.
Financial analysts said apart from the value to be derived from the eventual deployment of 5G services by the winners of the auction, the accrued revenue from the exercise, which is to be paid in naira, will go a long way in meeting some financial obligations of the federal government at the end this year.
Airtel, Globacom, Etisalat Haven’t Lost Out
Putting the narrative in proper perspectives, a telecom industry analyst and publisher of Technology Times, Mr. Shina Badaru, told THISDAY that hope is not lost for the other three major telecoms operators yet to get 5G licence, adding that there are still three other licences yet to be put for sale.
“There federal government has five licences for 5G. The government in its wisdom, through the NCC, decided to sell the first two for now. It means there will still be another bid in the future,” he explained.
The struggle for the last auction, according to him, was a reflection of the instinct of business promoters to seek to be among the first set of people to get such a licence for bragging rights, saying “everybody wants to get the first right to say we got ours from the first batch.”
`As far as he is concerned, it’s not a big deal that Airtel opted out at a stage, explaining that usually, businesses will make up their mind about a particular threshold it could go at every auction.
“Recall there were three bidders. The company would have done its mathematics internally and said if the auction goes beyond a particular price, we won’t go ahead. The spectrum is going to demand additional funding before it can be deployed. It’s just like you went to buy a car, the car is just one aspect of the whole process, you will still to be fuelling it, you will buy some other things, you will still do insurance. So, if you have only a N1million assigned for that car if, by the time you find a car of your choice, the price is N1.2million, you already know you have overshot your budget by more than N200,000 because you will still do insurance and other things.
“So, they would have done their maths internally and decided that when it gets to this threshold, we can’t go beyond it,” he said.
He believed that MTN won because of its market size and its capability. “So, MTN, on the other side, is the market leader and they have 73million subscribers.”
He believed that MTN being the market leader will like to be ahead in terms of delivering 5G because it will give them faster access.
Better Services
Badaru said Nigerian telecom subscribers are in for a great time in terms of speed and ease of accessing the internet.
He said this would be achieved for instance, “If you watch a video on your phone or other devices, you will find out that with a 3G network, the internet connection will be fast, then when it crosses over to 4G, it will be faster. With 5G, it will be a whole lot faster with very little waiting time. You want to download a video, it will be fast. Because they understand that the consumers want all these fast things on the go and that we are ready to pay for it once it is fast enough, everybody wants to get that 5G.”
Mass Porting Imminent
Badaru will not rule out mass porting from the network that did not win the licence for 5G. He, however, believed that “Somebody that exits today might still come back the other day when the government wants to auction the remaining three licences, so, that’s the logic. It doesn’t mean that because someone lost out today, it has lost out totally. It also means subscribers can port to any network of their choice. So, for instance, if MTN now has 5G and you have an airtel phone, you can decide you want to port, nobody is stopping you. It’s a free and open market,” he explained.
ALTON: Subscribers are the Real Winners
In his reaction, Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, who commended the NCC for a transparent exercise, said Nigerian telecom subscribers are the real winners of the auction.
He said: “In my view, I think there are more winners, the country won, the winners are the subscribers and the entire country. The reason is that it’s a benefit for all of us and the preferred bidders, we say well done and we are now looking at them and expecting that they would be able to deliver to the nation all the features and benefits of 5G that we have all learnt in the last years and so, we keep our fingers crossed.”
Pledging the support of the association to the telecoms firms, Adebayo assured the subscribers, saying now that 5G Spectrum has been auctioned, I think the good days are nearby. So, it’s a good development. The industry is very happy about it, we are delighted about the entire process from start to finish and we look forward with hope for better network, to better user experience, to high-speed data and all features and benefits as science has explained that are derivable from 5G.”
On the fear that subscribers might be the ones to pay the extra cost paid for the 5G spectrum by operators, Adebayo said the argument doesn’t make sense.
“The illustration is very simple. It’s like driving on an untarred road and now driving on a tarred road. You can imagine the experience both in terms of speed of travel, in terms of safety, in terms of comfort, and terms of turnaround benefits for them. The end-users will benefit from this even more than the operators themselves, the reason being that high-speed data will be provided at a relatively low cost, relative to what has been the case, the experience will be better. It’s like today it takes you 10 minutes to download a particular page, tomorrow it will take one minute to do the same. Today, you are trying to send an email and it’s taking time for the email to go or you are trying to download a movie or trying to watch live station and it’s going on and off, all those experiences will disappear in the technology of 5G.
“So the benefit is more than the cost. I don’t subscribe to the school of thought saying it’s more a burden to the subscribers. Not at all because earlier generations will continue to run on the network,” Adebayo stated.
Meanwhile, he explained that there will continue to be 2G services, 3 G services, and 4G services while 5G is introduced as according to him, “It’s not a migration from old and new.”
As more issues continue to dominate discussions industry affairs commentators said what will be of interest to subscribers who had loudly complained of poor services from the telecom sector is the speed and efficiency linked to the deployment of the 5G network.
The industry will also want to know the true identity of the promoters of Mafab Communications company and how and when the company plans to deploy its 5G network service.
