Of 5G auction, Mafab & nepotism

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By  Simbo Olorunfemi

While men and women of goodwill are understandably excited at the successful conclusion of the bidding process for the 3.5 gigahertz (GHz) spectrum auction for the deployment of Fifth Generation (5G) technology, in which Mafab and MTN emerged as winners, not unexpectedly though, some are not happy.

Whereas people are happy that the spectrum which had a reserved bid price of $197.3 million was snapped up for $273.6 million, that being a resounding vote for the current state and prospects of the Nigerian economy, some are kicking.

I have seen charges of nepotism levelled. Some have spoken of Islamic agenda. As usual, some have found a way to bring in the name of Bola Tinubu. Evidently, the issue has a lot to do with which part of the country the ‘promoter’ of Mafab comes from. The discomfiture with that is disingenuously wrapped in the argument that the company is of unknown pedigree, lacking in industry experience.

One must ask again – What is it with wins for Nigeria that rankle some so much? Where have these people been? Who stopped them from bidding for this? Were they barred or disqualified from participating in the lengthy process that has run for so long, with every step of the process meticulously laid out in the open, with series of engagement with critical stakeholders and the public? How do you lay a charge of nepotism over a public auction that went through 11 rounds of bidding in the full glare of critical stakeholders?

The charge has been made that Mafab is of unknown pedigree. The question is – What were the requirements spelt out as eligibility criteria in the Information Memorandum put out by the Nigerian Communications Commission? Did the company meet the criteria?

Whereas the IM clearly states that new companies are eligible for participation, Mafab itself, relatively new as it is, has an existing individual licence, same one GSM companies have, that is valid till 2030. What exactly is the problem? That the company outbidded a known name? So, Nigeria should have handed over the spectrum to known names at the reserved price or overlook a company which bidded highest for over a company whose exit bid was $270 million? Which one exactly is nepotism – overlooking the highest bidder for the lowest bidder or keeping to the rules by going with the two top bidders?

By credible accounts, the process was as transparent as it could be, with the Ascending Clock Auction System adopted by the NCC working perfectly over the 8 hours and 11 rounds of bidding. The three bidders actively participated in the competitive auction bid and none has lodged a complaint about the result or the process.

What then is the problem? Mafab is relatively new? How old were the companies which won the GSM licence in 2001? What industry experience did Mike Adenuga’s CIL have when it won in 2001? What experience did Globacom have before it got its licence?

The industry rests on the backbone of tested technology that is essentially foreign and universal. All the Operators rely or team up with internationally renowned equipment vendors to deliver service. There is nothing exceptional, in terms of technology anyone brings that another cannot bring or incapable of bringing. Each one is only an SPV, behind which there are all sorts of financing and technological collaborations to enable actualisation of objectives.

Perhaps, some think this is some playground where someone can be gifted a licence to play around. The depth and breadth of requirements is daunting. It is the bidder who stands to lose, and massively too, in case of default. It has a $20 million deposit on the line, apart from hefty sum invested in the preparation of the bid. It is difficult to make sense of the cry out there. It is a provisional win and winners are expected to pay the Winning Bid price, less the Intention-to-Bid Deposit, by February 24, 2022.

On assignment of lots, MTN Communications Nigeria Plc made an offer of $15,900,000 for the assignment of a preferred Lot, while Mafab Communications Limited made an offer of $11,120,000 for a preferred Lot. Thence, MTN Communications Nigeria Plc, having made the highest offer was given the right to select its most preferred Lot and it selected Lot 1 (3500-3600 MHz), while Lot 2 (3700-3800 MHz) is consequentially assigned to Mafab Communications Limited at no extra cost.”

There is no playing around. The task ahead for eventual winners is huge. It is good that the NCC has a timeline by which they will be accessed. According to the NCC, “the eventual licensees will have a rollout obligation plan spanning a period of 10 years, beginning from the date of award of the licence. Between the first and second year of the licence, the operators are expected to rollout service in, at least, one state in each geo-political zone. From the third to fifth year, they are obligated to cover all the zones. Between six to 10 years, they should cover all the states in the country, according to guidelines set out in the IM.”

I would think an eye on the timeline, starting with payment of the bid price, is what should be of primary concern to us. It is sad to see people turn every win a source of belly ache for themselves, often waking up late to the party, refusing to study first and and then dispassionately engage with the issues.

Nothing, as far as I can see, suggests a compromise of the governance code, in this exercise. A suggestion of nepotism, where rules have not been established to have been breached, where an open bid system was in operation, is rather unkind. As was the case with the GSM licensing, but for the CIL mishap, this has been another successful round, one which we should congratulate ourselves and the NCC for. The sidetalks belittle those who traffic in them. This is another win for Nigeria.

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