The City Reporters
Bitflux Communications Limited bided $23.25million to win the 2.3GHz frequency spectrum offered by the National Communications Commission (NCC) on behalf of the Federal Government for broadband Internet services.
In an electronic auction conducted by the NCC at the Transcorp Hilton Hotel, Abuja, Bitflux – a consortium of three operators in the Nigerian ICT industry – offered $23, 251,000 ahead of Globacom’s $23,050,001 to win the bid. NCC had a reserve price of $23m.
The computer-based auction, which was expected to hold for two days but lasted only 30 minutes, employed what NCC called an ‘Ascending Clock Auction approach’, where the amount to bid moves up from the reserve price, as the bidding process continues.
In the first round of the suspense-filled bid, which lasted about 15 minutes, none of the two bidding teams put in separate rooms and stripped of all communications gadgets, bid anything. This was an indication that the $26.4 million set for the NCC was considered too high for either of bidders.
This development led to the second stage called ‘Tie Breakers’, where the bidders were asked to “enter a bid price above or equal to $23 million reserve price and below the $26.4 million” mark-up price. It was at this stage that Bitflux won with its bid price of $23.25 million.
Speaking after winning the bid, Bitflux, led by one its directors, Mr. Biodun Omoniyi, who is also the managing director of VDT Communications, the largest indigenous fibre optic and copper infrastructure provider, said the bid was transparently done and the company was afraid that Globacom’s weight in the telecom industry would make the bid difficult for it (Biflux) to win.
“What has happened is not what was expected. We have bid for what we have bid for because we always work in line with our business plan,” Omoniyi said.
However, the Group Chief Operating Officer of Globacom, Mohammed Jameel, congratulated Biflux but said, his company “felt the price of placed on the spectrum was too high for its worth and also too high for our business plan. Our business model does not support such high price, compared to those we have bid for and won in the past.”
He said that Globacom will wait for another opportunity to bid for other spectrum and increase its presence in Nigeria’s telecom industry.
Bitflux has 14 business days, starting from today, to pay up after paying a non-refundable initial bid deposit of $2.3 million. If it fails to pay within this period, Globacom will be invited to pay. Even after paying up the bid price, Bitflus still has 30 days from the date of payment to pay N155million for Universal Access Service Licence (UASL), which Globacom and other telecom companies already had. UASL allows for fixed telephony whether wired or wireless; digital mobile services; international gateway services; national long distance services, and regional long distance services. The tenure for the UASL licence will be 10 years and subject to renewal.
While announcing the bid result, the Executive Vice Chairman, NCC, Dr. Eugene Juwah, said “With the bid price of $23.25 million bid by Bitflux, which is above what Glo offered, Bitfflux has won the one slot of 30Mhz of the 2.3GHz spectrum auction.” He said with the Bitflux has also become a ‘forerunner of broadband revolution’ in Nigeria.
Minister of Communication Technology, Mrs. Omobola Johnson, represented by the permanent secretary in the ministry, Mr. Tunji Olaopa, said the licensing of the spectrum would help in accelerating the 30 per cent broadband penetration target by 2017, as set out in the country’s National Broadband Plan.