A little alert before another 5G auction in December

Nigeria is in dire straits. She needs money for daily runs and is bungling on the edge of extreme desperation. Desperation can lead to selling of metal scraps for survival or even selling off national assets, as proposed in the 2023 Budget, what in the case of an individual, is pawning, that is, selling off personal items to meet exigent needs. It is not an enviable status to endure.

Under this condition, there is a desperation to scratch for everything, including the low hanging fruits, which always present an attractive offer. Frequency or Spectrum for telecommunications services occupy prime place in this consideration. It is therefore no surprise that the Nigerian Communications Commission (NCC), the telecommunications regulator, announced last week, that it was putting out for sale in December 2022, some frequencies for 5G services.

Published on the website of the Commission, www.ncc.gov.ng, is a material titled: Information Memorandum on 3.5GHz Spectrum Auction, issued on October 21, 2022. Quite interesting, that material. It details the various steps to be taken to be part of the next auction, gives updates on the country’s telecoms market, and pretty well presents some exciting information why an investor would want to come into the industry to do new business. 3.5GHz is the spectrum for 5G services.

In a little recap which I will call a superfluous tech peregrination, the NCC says: “In its drive to deepen broadband penetration in the country, the Commission in December 2021, conducted an auction of two (2) lots of 100MHz TDD in the 3.5GHz band to support the delivery of ubiquitous broadband services. The Commission is now desirous of auctioning the remaining two (2) lots of 100MHz TDD in the 3.5GHz band to support the delivery of ubiquitous broadband services in line with the Nigerian National Broadband Plan (NNBP) 2020-2025.”

The two available lots are 3400 – 3500 and 3600 – 3700. The one put out for sale last year and duly won by MTN and Mafab ranged from 3500 – 3600 and 3700 – 3800 in the 3.5GHz band. Each winner paid $273.5m for a Lot. The licence tenure is 10 years.

I have observed that while the Reserve Price (RP) for the proposed auction is $273,600,000.00, the RP for the one which was held last year was $197.400,000.00. Quite a significant rise, meaning there must be something happening in the telecommunications market to shoot the price that high. Or the peak of last year has simply become a benchmark for greater things to come!

Don’t get me wrong. Few months ago, three operators in India shelled out a whole of $19bn for Air Wave or Spectrum sales, and they planned to spend much more than that to roll out services. The auguries are different anyway, the huge population of 1.393bn (2021) and the regulatory environment may have made that eye-popping difference.

From all indications, there is so much money to be made from the telecommunications industry, either by way of investment or returns or even license fees which go to the government. However, caution is called for before the goose that lays the golden egg (oh that cliche again!) is crushed to death in a moment of rapacious greed.

I can’t say I feel the excitement in the industry the way it was last year. And my reaction is even more hebetated. Here are my reasons. The investment environment is not as good as it was last year, it is election season and there is a lot of uncertainty hovering all over, and there are the cynics who will simply assume that the process is not for altruistic purposes but for something beyond the love for telecoms.

And there is something about credibility and regulatory propriety. The NCC is very much concerned about this, very concerned about industry and public perception, which is why, each time it would refer to its history of regulatory transparency and its reputable standing in the global gathering of regulators.

During the auction last year, this writer gathered that the participants had squeezed a promise from the regulator that it would put a moratorium on further 5G auctions for at least 24 months. This would at least enable the pioneer 5G operators to recoup some of their investment before others would get the opportunity to join the fray. Only MTN is rolling out service at the moment, Mafab has yet to fully engage, not to talk of making some money back. It is not even 12 months yet, another process has started, leading to some kind of frosty response from some industry stakeholders.

There is also another response that should be of reasonable concern to the regulator. Some internal stakeholders are highly disenchanted with goings-on at the Commission. Some sources within the regulatory agency conversant with the regulatory processes, are very unhappy for what they feel is overbearing political pressure on the regulator to break its rules and kowtow to political avarice.

The regulatory authority should be concerned with lamentations within the system and appropriate their concerns to regenerate a new direction for the agency. A source told this writer that “This is nothing more than political pressure. NCC is in a difficult position and has lost its independence. The Commission has nowhere to run to for protection. No independence for the Board and no independence for the Commission,” multiple sources lamented.

Another source added, “there is no reason for this rush. Nothing says that the process must be completed before this set of politicians will end their term in office. There is no good for this rush,” the source added with signs of exasperation.

On this page we have complained about regulatory capture of some agencies, a situation where the laws and raw energies of an agency are hijacked or appropriated by an individual or a higher authority who assumes the responsibilities of the agency.  It brings scorn and ridicule to the agency and accentuates a helplessness that scares investors. Under this administration, the day-to-day running of some visible agencies have been taken over by the ministers who in some instances have awarded licenses without recourse to the agency. It is a most humiliating enterprise, and a troubling sign to local and international investors that the laws of the land can be castrated with political braggadocio.

Mercifully for all of us, the document on the NCC website is still a draft and is open to observations, questions, responses and even objections until November 11, 2022, when all those views will be processed for a final release and publication of the full document on November 18, 2022.

But here is my very humble question: who wants this license so much that is pressuring the regulatory agency to subvert its own rules, propriety and a legacy of regulatory transparency? While the answer is being minted, I suggest that the process be suspended, and also appeal to the politicians to leave the NCC alone, even in tatters. There will be enough time to recover and gather strength again.

This auction, in my own opinion, is not being done because government needs money to run the economy, or for the love of pervasive spread of broadband facilities across the nation, but shamefully because there must be some guys somewhere who want to make a final heist. Irrespective of the overwhelming power of greed, the NCC must be allowed to live its own life, the life of a regulator.