MTN’s Acquisition of 2.6GHz Spectrum Rekindles Hope of FDI

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Group CEO MTN, Phuthuma Nhleko

The declaration of MTN as winner of the 2.6GHz broadband spectrum licence has renewed the confidence in the Nigerian economy especially as it is expected to increase the inflow of foreign direct investment (FDI) to country. As well, the development has raised the hope of better telecoms offerings to Nigerians, who are now anxious to witness a fast rollout of the spectrum with a view to having ubiquitous broadband access. Emma Okonji writes

The Nigerian Communications Commission (NCC), last week, announced MTN as the winner of the nation’s 2.6GHz spectrum, and since then, Nigerians have been hopeful that MTN would bring about the much needed availability of broadband access to the Nigerian populace, giving its investment pedigree as the largest network operator in the country, and coupled with the fact that the spectrum is a broadband spectrum that is designed to deepen broadband internet access in the country.

Although NCC called for expression of interest among telecoms operators for the 2.6GHz spectrum licence, through a bidding process, only MTN showed interest in the spectrum, even when all other operators actually needed the spectrum to drive broadband penetration on their various networks. The action of MTN as the only telecoms operators with interest to invest in the country’s 2.6GHz spectrum, has been described by industry stakeholders as laudable, which they said, clearly demonstrated MTN’ commitment to invest in Nigeria, despite the global economic meltdown and the direct challenges it faced in the Nigerian telecoms space recently.

All eyes are therefore on MTN to do the magic of deepening the country’s broadband penetration and create available internet access to all Nigerians, being the only operator of the spectrum.

About 2.6GHz Spectrum

The 2.6GHz spectrum licence, which has been issued to MTN, is a 10-year licence, designed to boost broadband and internet penetration. Giving insights into the spectrum, the Director, Spectrum Administration at NCC, Austin Nwaulune, explained that the 2.6GHz spectrum has been identified for international mobile communications on a global basis and that countries need the spectrum to complement other lower spectrum band. He added that it would help deliver broadband everywhere and offers opportunity to improve network performance. The more frequency an operator has, the more capacity the operator will have to deploy and improve services.

According to him, the 2.6GHz spectrum has the capacity to harmonise spectrum bands that are used globally and allows connectivity anywhere in the world. He said the spectrum would also create opportunity for the deployment of advanced wireless 4G Long Term Evolution (LTE) technology services, as well as improve standardisation and harmonisation of telecoms operations. Other benefits of 2.6GHz spectrum according to him, include reduction of complexities, reduction of interference across borders, which means it can be used anywhere in the world because it is a harmonised spectrum band with increased flexibility for roaming subscribers’ lines.

How MTN Won the Spectrum

NCC had on February, 25, 2016, placed a publication of the resumption of the 2.6GHz frequency spectrum auction, which was followed by a period for the submission of questions to the commission, relating directly to the licensing process defined in the information memorandum, and the period elapsed in April 16. By April 29, 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. The actual bidding was to commence with preliminary auction exercise from May 16 to 19, and by June 10, 2016, spectrum winners must have made full payment for the licence won, and by June 13, 2016, the NCC will announce the winners that complied with full payment directive.

But to the utmost surprise of NCC, only MTN indicated interest to bid for the licence. After due consultations, NCC last week, declared MTN as the winner of the spectrum licence. It was gathered that MTN bid for six lots out of the available 14 lots of the spectrum and the reserve price for each lot of the 2.6GHz spectrum is $16 million. Since MTN indicated interest to acquire six lots, MTN is expected to pay 10 per cent of the total $96 million for the six lots, which is $9.6 million, as part of the pre-qualification process. By adding the 10 per cent compulsory payment of $9.6 million to the actual cost of the six lots that MTN bid for, which is $96 million, it means MTN must have paid NCC the total sum of $105.6 million to clinch the six lots of the 2.6HGz spectrum.

Expectations of Nigerians

Commenting on the 2.6GHz spectrum, the Chief Executive Officer of Teledom Group, Dr. Emmanuel Ekuwem, said MTN must take advantage of being the only operator on the spectrum band, to roll out its services as quick as possible to provide ubiquitous broadband access to Nigerians. According to him broadband availability would drive data services, which would in turn drive knowledge acquisition and productivity that would eventually boost the Gross Domestic Product (GDP) of the country. “Ubiquitous broadband access will lead to ubiquitous productivity, thus providing easy access for video conferencing, Skype, Facebook, WhatsApp and other social media,” Ekuwem said.

Stressing the importance of broadband to Nigerians, Ekuwem explained that Nigeria needed broadband access for education, entertainment, agriculture, health, e-Commerce, sports and in governance, among other things. People need to have seamless communication for businesses purposes and for keeping family relations, and we cannot have such seamless communication without ubiquitous broadband access. I therefore challenge MTN to roll out services on the 2.6GHz spectrum without delay, Ekuwem said.

The immediate past President of the Association of Telecoms Companies of Nigeria (ATCON), Lanre Ajayi, commended NCC for the auction of the 2.6GHz spectrum, which would further help to deepen broadband penetration in the country. He equally commended MTN for investing in the country’s 2.6GHz spectrum and called on other telecoms operators to also consider investing in the remaining lot of the 2.6GHz spectrum, to make it more competitive. According to him, Nigeria needed competition in broadband service offerings, in order to drive down cost.

MTN’s Assurances

Having been declared winner of the 2.6GHz spectrum, MTN has assured Nigerians of its commitment to further deepen broadband penetration from its current 10 per cent penetration level, to an appreciable level that would provide easy access to broadband services.

According to MTN Nigeria CEO, Ferdi Moolman, “After complying with all the requirements for the 2.6GHz auction and making the licence payment of N18.96 billion to the NCC, MTN has been issued a letter of award. With the 2.6 GHz band, we expect to roll out and provide the full range of LTE services to Nigerians, empowering Nigeria with the latest mobile broadband technology.”

According to Moolman, “We are very pleased with this development at this time, which is a further step in the right direction for Nigeria. Indeed, MTN is fully aligned and supports the NCC’s objective to deliver broadband services to present and future generations of subscribers, in line with the National Broadband Plan of 2013.”

He added: “This licence acquisition further demonstrates MTN’s abiding faith in the future of Nigeria and the resilience of the Nigerian economy. MTN continues to believe in Nigeria and we have expressed this belief in the level of our investment, which currently stands at approximately $15 billion and counting. We strongly believe that there is need for significant levels of investment in broadband infrastructure and services to truly launch Nigeria into the information age. We are honoured to be the arrowhead.”