The Nigerian Communications Commission (NCC) has set a reserve price of N273.6 million for the soon-to-be-auctioned 3.5GHz spectrums to ensure that interested companies do not pay less than what MTN and Mafab Communications paid for theirs last year.
According to the NCC’s Executive Commissioner of Technical Standards, Engr. It would be unfair, Ubale Maska, for new bidders to pay less than previous bidders for the same product.
The NCC explained this in response to complaints from industry stakeholders that the reserve price is too high and may discourage potential buyers from participating in the auction scheduled for December 19 this year.
Actual value
Speaking during a stakeholder engagement forum on the 3.5GHz spectrum auction held in Lagos yesterday, Maska said:Â
I am sure people in the industry are aware that auctions normally take place when the seller does not know the actual value of what he wants to sell. So, you come up with an idea of what it should be and set it as the reserve price. The auction now determines the actual value. Â
The last auction has established the actual value of the spectrum to be $273.6 million. So, if any auction of the same product is to take place that should be the starting point. Otherwise, if the reserve price is lower and only one player shows interest, it means the person will be getting it at the reserve price, which is lower than what the operators from the last auction paid, and that will be unfair to them. So, the proper thing is that having determined the actual value, you make it the reserve price for future auctions.
High price
Meanwhile, industry participants have expressed concern that the reserve price for the spectrum auction is too high, potentially discouraging potential buyers from bidding. In particular, Huawei, which provides telecom equipment, stated in its comment on the auction’s Information Memorandum that the high reserve price may result in no operator showing interest in purchasing.
Revenue for government
Although the NCC insisted that the decision to auction the 5G spectrum was motivated by the need to expand access to fast internet in the country rather than to generate revenue for the government, the government stands to gain a lot financially from it.
If the two lots are sold for the reserve price of $273.6 million, the federal government will receive at least $507.8 million from the auction. If more than two operators express an interest in purchasing, the government will receive more money as the price rises due to bidding.
According to the Information Memorandum, the licensees are expected to pay the federal government on or before January 20, 2023.
