NCC Awards Four 3G Licences

The NCC announced in February that it would auction four paired lots of 10 MHz in the 2 GHz range for 3G services, and set the reserve price at US$150 million (see Nigeria: 14 February 2007: NCC Sets Reserve Price of US$150 mil. for 3G Auction). Parties who wished to participate in the auction were required to submit an expression of interest by 16 February. The NCC then issued the full information memorandum for the auction on 23 February; the deadline for bidders to apply was 16 March; and the auction was due to take place in the week commencing 2 April. Bidders were required to submit a deposit of US$15 million.

The NCC said in a press release that by the bid deadline on 16 March, four companies had submitted applications: Alheri Engineering Co, Celtel Nigeria, Globacom, and MTN Nigeria. A total of 17 firms had submitted initial expressions of interest during February. The application submissions were then evaluated against the compliance details outlined in the information memorandum, and each was found to have been fully compliant. "In these circumstances, where the number of applicants matches the number of lots, no further allocation process is required," said the NCC. "As such, the NCC is pleased to announce that each of the applicants has been successful in its bid for a 10 MHz lot in the 2 GHz band. The commission expects to receive the licence fees, being the reserve price of US$150 million less the intention-to-bid deposit of US$15 million, within 14 business days of award of the provisional licence. Upon receipt of cleared funds, the commission will award the spectrum licence."

One of the key qualification criteria was that bidding was limited to licensed network operators, including the following operators: universal access service licence (UASL), digital mobile licence (DML), fixed wireless access (FWA) licence, long-distance operator license, national carrier licence, and private network links licence.

Outlook and Implications

Barring any mishap over the payment of licence fees, this was a quick and painless process for awarding the 3G licences in Nigeria. During 2007, Nigeria is expected to overtake South Africa to become the largest cellular market in Africa; by August 2006 it had 26.36 million subscribers. A number of private telecommunication operators (PTOs), which had 1.15 million subscribers among them by August 2006, have already launched advanced data services on CDMA 2000 1X EV-DO platforms, which is a recognised 3G standard. Most recently, Starcomms reported 490,000 CDMA 2000 1X subscribers. Notably, none of the PTOs applied for 3G licences, as they are able to offer 3G services using the existing spectrum allocated to them. To date, South Africa and Mauritius are the only other countries in sub-Saharan Africa in which operators have launched 3G W-CDMA services, although Vodacom Tanzania and MTC Namibia have launched HSDPA.

Some of the spectrum set aside for 3G by the International Telecommunication Union (ITU) had already been allocated in Nigeria and, given the multiplicity of operators, there is simply not enough spectrum available to offer it on a first-come, first-served basis. “That there is not enough spectrum to go round all the 20 major and medium-sized operators means that a form of competitive licensing is inevitable,” said Stephen Bello, NCC's executive commissioner for engineering and standards, at a forum on 3G licensing held in April 2006 (see Nigeria: 27 April 2006: NCC Holds Forum to Examine 3G Licensing). The NCC engaged the services of PA Consulting Group to develop and oversee the auction and licensing process (see Nigeria: 29 December 2006: NCC Outlines Plans To Auction 3G Spectrum).