Ajogwu, last Visafone boss gives insights on spectrum at Jim Ovia’s book launch
Senior Advocate of Nigeria (SAN) and the very last boss of defunct Visafone Communications Limited, Dr. Fabian Ajogwu, on Monday provided further insights on the build up and circumstances leading to the purchase of the company and its 800MHz spectrum by MTN Nigeria.
Currently, the nation’s telecoms industry is waiting for the regulator, Nigerian Communications Commission (NCC) to come out with its findings from recent stakeholders’ public hearing on why MTN should own and manage the spectrum used by defunct Visafone.
There had been stiff opposition against the use of the spectrum by MTN against the background creating an unfair level playing group in data segment as MTN will use the resource to deepen dominance of the market.
Presenting his goodwill message at the launch of a new book; Africa Rise and Shine, written by chairman of Zenith Bank Plc., Mr. Jim Ovia, he gave a tailored explanation surrounding the business intelligent decision by MTN Nigeria to bid and buy over Visafone.
He argued that the key factor considered by MTN is buying the telecoms at a whooping N47.5bn is to use the spectrum in growing its network infrastructure and service delivery.
According to him, “Many operators have gone burst through over-zealous bidding for additional spectrum”.
“So MTN knew that to avoid a bidding frenzy, and he also knew that they would need to avoid a bidding frenzy, among their competitors, they would have to make an exclusive offer with a purchase price so substantial that it would be difficult to refuse, and this is exactly what they did. “The unfolding of this offer and the ensuing negotiation happened against the back drop of MTN’s suffering one of the world’s largest recorded regulatory imposed fine of 5.2 billion USD this was later negotiated to significantly lower amount.
“As a result, the entire MTN team changed mid-way through the sale process necessitating our getting an entirely different group within MTN on the board, with the acquisition whilst they were distracted grappling with how to meet the 5.2 billion fine.
“The intrigue wasn’t over. To complicate matters, the Abu Dhabi based sovereign wealth fund backed operator called Mubadala which owned the Nigerian Telecom company called Etisalat had learned of our impending deal recognizing the asset goldmine that Visafone owned, Etisalat sued MTN Nigeria and Visafone as a second defendant as well as the regulator, the NCC for approving the deal.
“Etisalat claim was that MTN was already too big, dominated the market and that the government should not allow MTN to become bigger by acquiring Visafone.
The law suit was filed at the federal high court in Lagos, the court ruling was short and simple and straight forward; Etisalat lost.
“Despite all these problems, I am proud to say that the deal closed and every one of the two million Visafone subscribers enjoyed a seamless migration to the MTN network.
Before now, Corporate Relations Executive of MTN and Liverpool trained lawyer, Tobechukwu Okigbo has posited clear facts and strong arguments on why the company should be allowed to manage the natural resource after all.
Business Hilights recalls that since a public hearing by the NCC on the matter was conducted, the Commission itemized everything discussed and published same on its website and the publication has been eliciting reactions as the waiting game continues.
However, giving further insights on the matter with regards to other operators’ claims that MTN having access to the 800MHz would stifle them out of business, Okigbo argued that “This is a conversation around competition and dominance. In 2013, following a study, NCC found MTN, dominant in the retail mobile voice market. This is very important because we need to understand that there are different markets in the telecommunications industry”.
He said what you do in communications when you are regulating is that you identify and segment relevant markets and they are looked at separately to ascertain the level of competition in each relevant market. So, you have voice, leased line, downstream/last mile services and data services etc. MTN was found dominant in the retail mobile voice market.
According to him, “It was found jointly dominant with Globacom in the wholesale leased line & transmission capacity markets. MTN was however not found dominant in the mobile data services market which is the market relevant to the spectrum resources in question. In actual fact, the conclusion of NCC that time was that the mobile data market was “effectively competitive” and therefore no operator was declared dominant.
Okigbo argued that “When organisations say MTN will become dominant, this is futuristic. They are saying that if MTN is allowed to use the 800MHz it might go on and become dominant”. “However, looking at it critically, we are a communications company and one of the most important resources in communications is spectrum. Every telecommunications company that is committed to any area that it operates would always look for an opportunity to acquire spectrum for the simple reason that spectrum is the basic resource needed to do the business.
“Now, what MTN has done is to strategically focus and try to acquire spectrum knowing, like everybody does that data is the next big thing. It is the only thing on the table going forward, especially when you talk about Internet of Things, convergence and all others.
He explained in clear terms that “in looking at our position and what we should do, Visafone was on the table and its spectrum was not one assigned to MTN by NCC and I think we need to establish that fact. It was a function of somebody wanted to sell and another person was ready to buy.
“It was never a question where it was only made available to MTN to acquire. In actual fact, it would appear that even before speaking to MTN, Visafone had spoken to other operators, but they were not willing to commit resources, but MTN was. Assuming the spectrum was available and the Commission approaches only MTN and says come and take this spectrum, one can then posit that MTN may have been given an undue advantage.
“However, if the commission had the 800MHz and they were conducting an auction and they put out the spectrum and MTN comes, bids and gets it. If you didn’t show up for bidding, can you later turn around to say MTN should not have it because they will become dominant? How do we explain that argument? In this case, Visafone was available for any interested party to buy, MTNN did. Similar to how it participated in the 2.6GHz auction. It is unfair to now say that MTN should be prevented from having access to what it acquired fairly.
Okigbo made it clear that “For me, it is about which company is committed to this environment? Who believes that it makes business sense to operate here? Who thinks that they want to invest in Nigeria? These are the questions.
“For me, let’s look at it from this perspective; is MTN the biggest operator in the world? Some of the operators who raised concerns about MTNs access to the 800MHz spectrum are bigger than MTN globally and incidentally refused to participate in the 2.6GHz spectrum auction. Would you think that if they are committed to Nigeria, that they cannot for example, buy Visafone or bid for 2.6MHz?
“Now, not having invested in those resources; speaking from a pedestrian point of view, is it fair that the person who has shown commitment and invested should not be allowed to have it? Is it proper to limit another willing investor’s desire to invest simply because another player in the industry is not willing to invest?
“These are important questions that need to be answered. If the Commission in line with its powers under the Nigerian Communication Act of 2003 secures additional broadband spectrum and puts it up for auction, will it be fair to ask that an operator be denied the opportunity to participate when you are not willing to buy? That is one question,” the MTN official queried.
