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airtel Segun Ogunsanya
Airtel's Segun Ogunsanya

Why we pullout of Nigeria 5G License Auction – Airtel Africa

The Management of Airtel Africa has said it could not afford to sacrifice more than $270 million for a futuristic 5G services that is still evolving with uncertain availability of affordable devices and business cases.

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This is according a press statement Thursday signed by its Group Chief Executive Officer, Mr. Segun Ogunsanya.

Mr. Ogunsanya confirmed that the Nigerian subsidiary of the company pulled out of the auction after

submitting its final bid of $270m.

According to the Airtel Africa CEO, “The business case for 5G across all sub-Saharan markets is

evolving, and we remain committed to driving broadband capacity in our various markets. We will

continue to closely track the 5G ecosystem over the next several years, in particular the availability

of affordable 5G devices and relevant use cases.

“Airtel Africa retains ample capacity, spread across various spectrum bands, in Nigeria and its other

markets, to continue to meet the growing data demands of our customers for many years to come,

with several potential routes available to the business to deliver even greater capacities, cost effectively, in the long run”.

He however commended the Nigerian Communications Commission (NCC) for a transparent 5G auction completed on December 13, 2021.

After 11 rounds of bidding that lasted eight hours, Mafab Communications Ltd and MTN Nigeria Plc, have emerged the two successful winners of the 3.5 gigahertz (GHz) spectrum auction for the deployment of Fifth Generation (5G) technology to support the delivery of ubiquitous broadband services in Nigeria.

The two winners emerged in a keenly contested 3.5GHz Spectrum auction conducted by the Nigerian Communications Commission (NCC), in collaboration with the Federal Ministry of Communications and Digital Economy. The event took place at the Transcorp Hilton Hotel, Abuja on Monday, December 13, 2021.

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Three companies, namely MTN, Airtel and Mafab Communications Limited, had qualified for the auction, having met the requirements stipulated in the Information Memorandum (IM) for the spectrum auction. The three companies had also participated in a mock auction held on Friday, December 10, 2021, which served as a precursor to the Main Auction conducted on today (Monday, December 13, 2021).

In an exercise that clearly demonstrated demand outstripping supply, with Ascending Clock Auction System adopted by the Commission, the three bidders participated in the intensely competitive auction bid.

In the first Round of the auction, the bid price was fixed at $199,374,000.00; $201,367,740.00 at second Round; $204,388,356.10 at third Round; $209,407,962.50 at fourth Round and $215,782,901.30 at the fifth Round.

The auction prices increased progressively to $224,414,217.43 at the Sixth Round; $231,146,643.96 at the seventh Round; $240, 392,509.71 at the eighth Round; $251, 210,172.65 at the ninth Round; and $263,700,050.00 at the Round 10 of the auction exercise.

The auction process reached its peak at Round 11 when the bid price graduated to $275,904,886.25 with all the three bidders still actively participating. The Main Stage of the Auction, however, ended at the conclusion of the 11th Round, with Airtel listing an exit bid of $270,000,000, while MTN posted an exit bid of $273,000,000, giving way to the Assignment Stage. At this point, Airtel had dropped off from the race having posted a lower exit bid, thus leaving Mafab and MTN as winners of the two available lots.

Announcing the results of the Auction exercise, the Executive Vice Chairman of NCC and Auction Overseer, Prof. Umar Garba Danbatta, who recalled the processes and activities leading to the successful conduct of the auction, said the NCC published a public notice on its decision to award two lots of 100 megahertz (MHz) Time Division Duplex (TDD) available in the 3.5 GHz band through an auction process to support the delivery of ubiquitous broadband services for the deployment of 5G network in Nigeria.

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“Subsequently, an Information Memorandum was issued on November 10, 2021, in which Bid applications for the available spectrum lots were invited. By the deadline for receipt of applications on November 29, 2021, the Commission received applications from three licensed telecoms companies, viz: Airtel Networks Limited, Mafab Communications Limited and MTN Communications Nigeria Limited,” he said.

“The auction held successfully today, Monday December 13, 2021 at the Transcorp Hilton Hotel, Abuja with the three bidders competing for the available two slots. The Commission adopted the Ascending Clock Auction format which ended after Round 11 and proceeded to the Assignment Stage. It is my pleasure to announce that at the end of the auction, Mafab Communications Limited and MTN Communications Nigeria Limited emerged as provisional licence winners,” he said.

Arising from the above, Danbatta said that the winning bid price for the auction is $273,600,000 for each lot of 100 MHz TDD and the provisional winners are expected to pay the Winning Bid price, less the Intention-to-Bid Deposit, by February 24, 2022.

He expressed satisfaction that the auction process was efficient, fair, credible, well-organised and transparent and was designed to deliver the ideal outcome.

Accordingly, Danbatta said the strongest bidders have emerged provisional winners, raising a substantial amount for the Federal Government.

The EVC congratulated the winners and thanked the Federal Government for its support and commitment to the deployment of 5G technology in Nigeria, which, he said, will bring substantial network improvements, including higher connection speed, mobility and capacity as well as low-latency capabilities to communications services in Nigeria.

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Sequel to the successful auction by the two winners, Danbatta said in line with the processes outlined in the IM, the provisional winners have proceeded to the Assignment Stage.

“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,” the EVC said.

The EVC thanked all stakeholders, who have contributed to the success of the auction process. He said the huge investment that will accrue from the sales of the spectrum band auctioned will result in increased transformation in life and businesses.

Earlier, at the opening ceremony, the Honourable Minister of Communications and Digital Economy, who doubles as the Chief Host, Prof. Isa Ali Ibrahim (Pantami), who emphasized Federal Government’s commitment to driving digital economy, commended the Commission for its efforts towards implementing the 5G Deployment Plan for the country.

He expressed optimism that the dawn of 5G network in Nigeria will offer significant advantages over current technologies, some of which include much lower latency, higher bandwidth, greater device density, longer battery life for nodes, and greater network flexibility.

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