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The Nigerian Communications Commission (NCC) is preparing to auction the second two spectrum slots in the 3.5 GHz band by the end of 2022 to facilitate the deployment of fifth generation (5G) services in Nigeria. increase.
Telecommunications companies interested in licensing face a reservation price of $273.60 (N119.4 billion). Experts say the license price does not reflect the new reality given the country’s current economic conditions unfavorable to telecommunications businesses.
The Commission may have derived the lowest prices from the final bids for the license’s first two slots, with MTN Nigeria and Mafab Communications emerged as the winners.
Deploying 5G networks is capital intensive, which in many cases can be a barrier to the pace of deployment, but in some countries the affordability for operators to further accelerate the pace is increasing. In India, for example, following industry recommendations, regulators have reduced the mid-band 3.3-3.5 GHz reservation price by 36% from $64.17 million to $41.31 million per MHz.
For South Africa, investors were allowed to bid on either lower or higher frequency bands. Of his six winners that eventually emerged, his two on Vodacom and MTN got the big bands, while Rain, Telkom, Cell C, and Liquid Telecom got the lower bands his spectrum.
Ahead of the first auction, the Nigerian telecom operator expressed disappointment with the $197 million floor price set by the commission, vowing to revise the price down given the harsh economic realities. Recommended. NCC went ahead with a fixed reservation price of $197 million. The auction finally ended with him $273.6 million.
However, Airtel Africa dropped out of the auction after failing to bid above $270 million. Airtel Africa CEO Segun Ogunsanya said the telco pulled out of the bid because he wanted to monitor the market and explore his 5G service at affordable prices to meet subscribers’ broadband demand. .
After losing its 5G license in Nigeria, Africa’s biggest market, Airtel acquired additional spectrum in Kenya for $40 million to expand its operations and enable plans to roll out 5G in the East African country. . Telecom companies have yet to start rolling out 5G in any country in Africa. This suggests that they may be taking their time choosing what is right for their company and may not be too keen on breaking the bank with 5th generation technology.
“I don’t think Airtel is in a rush to participate in the NCC’s bid in Nigeria at the new reserve price given its recent losses,” said an industry executive who wished to remain anonymous.
Nonetheless, Airtel’s semi-annual financial report gives NCC hope that the telecom company can return as a bidder. The company posted his 18.3% total revenue growth in Nigeria across both mobile and mobile money services. This contributed significantly to operating income of $425 million, up 20.6%, after-tax income of $178 million, up 25.3%, and underlying income of $614 million, up 14.9% in reporting currencies became.
Also Read: NCC Exceeds 5G Revenue Target, Set Remaining License to N119.4bn
But soaring profits underscore the difficult business environment Airtel and other telecom companies must navigate in Nigeria. Diesel prices remain high, foreign exchange shortages make equipment imports many times more expensive than in the past, and sharp inflation of 20.77%, the highest in 17 years, hits consumer spending on telecommunications services. is receiving
These recently forced telecom companies to request through associations to review prices for data and airtime that the government has denied. , eventually the government ordered the two telecommunications companies to reverse their actions. Businesses are still upset with the back and forth of price revisions by the NCC. Carrier sources said the commission agreed with carriers to quietly raise prices, and agreed to change direction when public backlash intensified.
Potential 5G bidders may also be deterred by the not-so-exciting outcome of MTN launching its 5G network in September. Since its inception, the telecom company has had to make a special effort to increase his 5G subscriptions. As part of this effort, we aim to partner with other stakeholders such as Intelligra to make 5G-enabled devices more affordable and accessible to more Nigerians. However, he acknowledges that finding compromises with banks on device financing requires a delicate balance.
Globacom, the third-largest carrier, may also not be on the table for bidding. The Nigerian-owned telecommunications company owes several contractors, sources said. Globacom was the last telecommunications company to launch a payment services bank, despite being one of his three first to be licensed by the Central Bank of Nigeria.
Another dark horse prospect of beating incumbent telcos in the 5G auction could be an exit for NCC, which is focused on hitting its N50 billion revenue target. It clearly shows the difference between ambition and reality in the industry. Given a five-month extension, Mafab Communications now has less than two months to meet its timeline. Failure to implement after five months could affect investor confidence in the business environment.
The NCC does not appear to be perturbed as it has set strict deadlines for upcoming auctions. In a statement and information memorandum, the commission said it would set up a mock auction on December 16, with a formal auction three days later.
The process is expected to enter the granting phase on December 21, 2022 with the announcement of the preliminary bid winners and notice of provisional licensing.
For 2023, where applicable, spectrum and operational license payments will be made on January 20, 2023, and the auction process will conclude and results will be published on January 23, 2023.
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