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Bitflux Beats Globacom to 2.3GHz Spectrum Licence

20 Feb 2014

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By Emma Okonji and Dele Ogbodo 

Bitflux Wednesday shocked industry watchers when it emerged winner of the Nigerian Communications Commission’s (NCC) 2.3GHz spectrum auction, with a bid of $23,251,000, beating Globacom, which bid $23,050,001 in a keenly contested exercise that took place in Abuja.

The auction, which was regarded as transparent, was a two-horse contest between Globacom and Bitflux. Both operators qualified at the pre-qualification stage, from among 19 operators that initially indicated interest to bid for the spectrum licence.

The bidding started with a mock auction on Tuesday and ended yesterday, when the final exercise was witnessed by government officials, industry stakeholders and journalists.

Although the NCC, organisers of the bid exercise, had earlier fixed a reserve price of $23 million, it however increased it by 15 per cent, a few minutes before the final bid round commenced and arrived at $26.45 million as the new reserve price.

The bidders were advised to begin their bidding with the new reserve price of $26.45 million, and were expected to increase the amount as they move from one round to the other.

Reeling out the rules of the auction, Director, Spectrum Administration at NCC, Austin Nwaulune, described the exercise as an ascending clock auction, where the bidders were expected to continue increasing their bid prices until a winner emerged.

According to Nwaulume, at the end of the bid round, if the bidders tied, they would have to start all over, and if they still tied again, then they would be invited to roll a dice for a winner to emerge.

The bidders were kept in separate rooms and were dispossessed of all communication gadgets, to stop them from communicating during the bid exercise. They were only allowed to use computers, since it was a computer-based auction, where results were generated by software.

At the end of round one, there was a tie at zero level, which indicated that none of the bidders were willing to bid from the new reserve price of $26.45 million.

After the tie in round one, the bidders were moved to the second round, where they were allowed to bid from the initial reserved bid price of $23 million. During the second round, Bitflux offered to pay $23,251,000, but unknown to Globacom, the second national carrier offered a lower sum of $23,050,001 for the licence.

At the end of the second round, Globacom was not willing to proceed to the third round, enabling Bitflux to emerge winner.

Pleased with the outcome of the exercise, the Executive Vice-Chairman of NCC, Dr. Eugene Juwah, congratulated both bidders and the spectrum management committee of the commission, describing the exercise as transparent and healthy.

He however said Bitflux has 14 business days to pay for the licence starting from the day of the auction. He explained that failure to pay within 14 business days would mean that Globacom would be called upon to pay for the licence.

He further explained that Bitflux would pay an additional N155 million within 30 days of payment of $23,251,000 for a Unified Access Licence.

“It is after the payment of $23,251,000 and the additional N155 million that the NCC will issue Bitflux the 2.3GHz spectrum licence as well as a Unified Access Licence,” Juwah said.
Congratulating Bitflux for winning, the Group Chief Operating Officer of Globacom, Mr. Mohammed Jameel, said he was satisfied with the auction, and described it as truly transparent.

Giving reasons why Globacom lost to Bitflux, Jameel said the reserve price fixed by NCC was far above the amount from the previous exercise, and that the price did not fit into the business model of Globacom.

He further explained that NCC’s reserve price was too high for such a spectrum, adding that there would be more opportunities for Globacom, going forward.

One of the Directors of Bitflux, comprising a consortium of VDT Communications Ltd, Bitcom Systems Ltd and Superflux International Ltd, Mr. Biodun Omoniyi, who was visibly elated, thanked NCC for what he described as a transparent auction.

He equally thanked Globacom for accepting defeat in the interest of the country, and assured Nigerians that in the next five years, the benefits of the 2.3GHz spectrum licence would be felt by everyone.

President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Lanre Ajayi, who was there as an observer, commended NCC for its transparency.

“The exercise is transparent and what this means is that NCC is not a person-driven institution, but a process-driven institution that is doing everything to promote the good image of Nigeria, in spite of our negative image,” Ajayi said.

Chief Executive of Teledom Group, Dr. Emmanuel Ekuwem, who was also at the auction, commended both bidders for their maturity in keeping to the rules of the game.
He also commended NCC for the transparent auction, saying: “NCC has proved to Nigerians and the rest of the world that there is hope for Nigerians.”

The Minister of Communications Technology, Mrs. Omobola Johnson, who was represented by the permanent secretary of the ministry, said: “We have launched the broadband strategy and the 2.3GHz auction that will further accelerate broadband penetration in the country and further grow her GDP.”



Tags: Nigeria, Featured, News, Bitflux

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