Operators Pick Holes in NCC’s 2.6GHz Spectrum Auction

Emma Okonji

Four months after the Nigerian Communications Commission (NCC) announced MTN as the winner of six lots out of the available 14 lots in the 2.3GHz spectrum licence, telecoms operators have boldly come out to fault the auction exercise.

According to them, they were not comfortable with the conditions for the auction exercise, hence they backed out from participating in the auction, which eventually produced MTN as the only bidder and winner of the national licence in June this year.

The operators who spoke at a postmortem forum on 2.6GHz auction monday in Lagos, organised by NCC, said every auction exercise, where the highest bidder wins has the characteristics of being lopsided, and designed to favour only big operators that have the financial muscles, to the detriment of small operators who have thin financial base. They also said they were worried and uncomfortable with the high reserved price of $16 million per lot, owing to the poor economic state of the country.

According to them, they deliberately declined to bid for the auction, despite the heavy awareness created around the spectrum by NCC, for the fact that they suspected that the conditions for the auction would pose serious business risk for them.

The operators’ refusal to let NCC know of their plans to back out, as at the time the bid was declared open in February this year, dazzled NCC to believe that the operators were willing to bid initially.

It was on April 29, 2016, when the application was closed to all operators to give room for the auction committee to scrutinise the applications and inform those that will qualify for the bidding exercise, that NCC realised that only MTN indicated interest to bid and had applied for 6 lots out of the available 14 slots in the 2.6GHz spectrum licence.

It was at this point that NCC, reviewed MTN’s application and in June this year, announced MTN as the winner of the 2.6GHz spectrum licence.

Disturbed by the action of the operators, the Director, Spectrum Administration at NCC, Mr, Austin Nwaulunne, told the audience at the forum that NCC had to organise the postmortem forum on the 2.6GHz spectrum, just to find out what went wrong with the auction exercise that forced the operators to back out from the exercise.

Commending NCC for the courage to invite the operators and other stakeholders to deliberate on the 2.6GHz spectrum auction, the Chief Executive Officer of Spectranet, Mr. David Venn, said although the auction exercise appeared transparent just the same way NCC had conducted previous licence auction, but that the operators feared that the auction was meant for big operators who have the money to play with. He said the smaller operators would eventually lost out by the end of the day, hence they all declined. He suggested that going forward, NCC should consider the revenue sharing arrangement for allocation of spectrum, instead of the auction exercise. He said as at the time NCC was considering the auction exercise, the price of data had already crashed in the telecoms market, a situation that affected the revenue generation of operators to bid for the 2.6GHz spectrum which he said had always attracted heavy capital investment.

The Director, Regulatory and CSR, Etisalat Nigeria, Mr. Ikenna Ikeme, blamed the situation on lack of access to local funding which he said made telecoms business very difficult, and also slowed down investment in telecoms industry. Going forward, he advised NCC to combine expensive spectrum like 2.6 GHz, with other cheaper spectrum like the 700MHz and 800MHz spectrum that are less expensive.

A director at Airtel, Mr. Lateef Akintunde, was of the opinion that the reserved bid price of $16 million per lot was on the high side. He explained that the cost of spectrum rollout was also expensive and must be factored in when bidding for any spectrum.

The Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, who was represented by the Director, Public Affairs at NCC, Mr. Tony Ojobo, said: “The commission in consonance with its practice of collaborative regulation, seeks to get useful industry feedback on the auction with the aim of ensuring the effective and efficient usage of available spectrum bands for the delivery of broadband internet access to Nigerians.”

Nwaulunne said the feedback from the operators would be taken to the commission for further deliberation and action.