REVISITING THE SECOND NATIONAL OPERATOR LICENCE

 Sonny Aragba-Akpore urges the NCC to reassess the terms of the licence for the Second National Operator

Worried by the failure of the Nigerian Telecommunications Limited (NITEL) to meet the access demand of fixed telephone services in the country, the Nigerian Communications Commission (NCC) licensed a Second National Operator(SNO) in 2002.

At that time, the sector was in dire need of telecommunications services even after the Digital Mobile Licence (DML)auction of 2001. State-owned, Nigerian Mobile Telecommunications Limited (Mtel) was one of the beneficiaries of the GSM auction in 2001 without firing a shot. It only waited for the bid conclusion and the bid price of $285m was paid.

But while the other beneficiaries in the auction – MTN and Econet Wireless (EWN) began a spirited rollout obligation, Mtel literarily went to sleep, after paying the licence fee.

NITEL, its parent company was already in a state of comatose despite the efforts of the government to prepare it for privatization.

NITEL, with its formidable national infrastructure spread, blew the opportunity to create a strong presence and make a difference.

The South African example comes to mind, readily. The state-owned Telkom South Africa subjected itself to the national telecommunications regulator, the Independent Communications Authority of South Africa (ICASA), but our own NITEL did not subject itself to the NCC

Secondly, most of the managers at the NITEL then were plagued by ownership mentality and so will not let go of the enormous powers they wielded. They tried to subject the regulator to its whims and caprices more so since it was NITEL that provided the N50m take-off grant that enabled NCC to take root in 1993. NCC‘s existence depended strongly on NITEL, at the time.

The acquisition of NCC’s first corporate headquarters at 48, Saka Tinubu Street, Victoria Island, Lagos, purchase of official and operational vehicles, recruitment of the first set of staff was through the benevolence of NITEL.  So it was difficult and if not impossible for the NCC to subject NITEL to its control.  Even the law setting up NCC, Decree 75 of 1992 midwifed by a committee headed by Engr. Vincent Maduka was silent on how to deal with the NITEL issue. And so NITEL was left to its own devices. Today both the government and the people are the worst for it.

The South African example was clear. ICASA was in charge of the telecommunications and broadcasting services in that country.

When ICASA threw open the process to license GSM operators, TELKOM South Africa quickly went into alliance with Vodaphone of the United Kingdom (UK) and came out with Vodacom Limited which at the time had only MTN as a competitor. Vodacom at some point was the leader of GSM services in South Africa until MTN made inroads to Nigeria in 2001.

Nigerian operations buoyed MTN’s entry into several African countries today thereby being the largest mobile operator in Africa.

So when the NCC took a decision to licence an SNO to complement the NITEL even when its failure was a question of time, many industry players applauded the move.

The NCC stated clearly that in consideration of the potential growth of NITEL and other licensed operators, further demand by subscribers will require the licensing of a Second National Operator (SNO) to provide telecommunications services at a national level including but not limited to the long-distance transmission network, full international gateway services, mobile telephony services, fixed telephony services, and value-added services (VPS) among others.

“For these services, the SNO will be awarded a National Carrier Licence, an international gateway licence, and Digital Mobile Licence (DML)’’ the NCC document stated unambiguously.

The information memorandum stated that the SNO licence authorizes the provision of telecommunications services on a national basis, for a term of 20 years from the date of award with renewal for a further 15 years upon payment of a new fee.

Each bidder was to pay an application fee of $50,000. The rollout obligation was that the SNO should provide at least one percent of its installed capacity at any given time in each state of the federation.

The document stated that:

Rollout targets will be measured according to the following time scale:

12 months, a minimum of 150,000 fixed lines; 36 months, a minimum of 550,000 fixed lines; 60 months, a minimum of 1,200,000 fixed lines.

Radio Spectrum International (RSI) was the consultant to the SNO bid process. Of the five companies that applied for the SNO license, only Globacom Limited, a Special Purpose vehicle (SPV) promoted by Mr. Mike Adenuga successfully made it through the financial bid stage by paying the mandatory deposit of $20m on August 13, 2002, and was provisionally awarded the license for a bid sum of $200m. The balance of $180m was paid on August 30, 2002, and got the NCC nod for the SNO licence.

In August 2022, it will be exactly 20 years since Globacom won the licence for the SNO but there are questions as to the fulfilment of the timeline for the provision of fixed lines. As of December 2021, NCC statistics for mobile telephony was as follows:

MTN had 73,594,682 lines with 37.72% market share. While Globacom with 54,817,363 lines occupies 28.09% market share.

The rest are Airtel with 53,926,886 lines and 27.64% market shares and 9mobile with 12,789,344 lines 3.55% market shares. In terms of percentage market share by technology, GSM occupies 99.75%, while fixed telephony/wired services hold 0.01% of the market.

This explains why the NCC should revisit the terms of the licence for the Second National Operator.