Regarded as an underdog, unknown, and unsung, Mafab Communications was the least likely qualified bidder in the 2021 fifth generation (5G) technology auction. It had no experience or history in telecommunications. But it shocked everyone except its promoters and its supporters in the system. Many questions followed. MTN, which won the second of the two licenses on offer, was well known. So how did Mafab Communications find its way into the arena? Official records state that the company was incorporated on July 8, 2020, and a year later, here it was fighting for a 5G license in the same auction with MTN and Airtel.
There must be something about it that is strange to the public. It paid the $273.6m license fees with a fanfare, and its permit and timeline to roll out were secured. It failed to meet its rollout obligations, and despite a second extension granted by the regulator, Nigerian Communications Commission (NCC), it still did not make any difference. Then the news filtered out recently that the game was over. It was preparing to cede its spectrum to its “competitor” MTN, thus truncating the ambitions to join the big-league in-telecommunications service provision in Nigeria.
While it is assumed that Mafab Communications had some stamina to hold on for nearly five years even when it was obvious it was swimming against the tide, no one has claimed responsibility for the failed dream of its promoters, but sometime in the future, Torians will ask questions about how the regulator and its consultants concluded to award Mafab a sophisticated license like 5G when there was no sign the company could weather the storms without the requisite experience and expertise. Indeed, the alleged “failure of Mafab cannot be traced to the company alone but also to the system which ignored due diligence in every material particular and went ahead to assign the spectrum.
Industry players were worried then and so are not shocked by the turn of events now. Even when circumstances appear different, let us refresh our memories about the privatisation of Nigerian Telecommunications Limited (NITEL). The Bureau of Public Enterprises (BPE) had released a very well-articulated information memorandum (IM) for the privatisation process of the state-owned company in 2001. Tempting as the document was, no fewer than 16 companies and multinational corporations expressed interest in bidding.
The process began according to the rules, but somewhere along the way, the system began to alter the rules, allegedly tilted in favour of some interests. Three bidders with technical and financial proposals which met the information memorandum were formally evaluated by the BPE in November 2001.
Investors International London Limited (IILL), promoted by Chief Bode Akindele (the Parakoyi of Ibadan), First Bank Nigeria, among others, emerged as the preferred bidder with a bid price of US$1.317 billion. Telnet Nigeria was the reserve bidder with US$1.310 billion bid price. It was promoted by Dr Babatunde Carew, Dr O.Denloye, Chief Sonny Odogwu (the Ide Ahaba of Asaba) and others.
IILL paid the required 10% deposit but defaulted in paying the remaining 90% by the deadline, causing the transaction to collapse. Telnet Nigeria was subsequently invited to negotiate, but it too declined to take up the offer. And so, the exercise was truncated. But unlike Mafab Communications, which jumped into the 5G fray with no requisite experience or any known technical partners, all the bidders for NITEL had experienced technical partners. The BPE guidelines were very clear about that to prequalify. So apart from exhibiting financial muscle, such companies must have relationships with technical partners that have managed a minimum of one million telecommunications networks.
Investors International (London) Limited (IILL) had as technical partners Portugal Telecom and KPN of the Royal Dutch Telecom Netherlands, as the preferred bidder that won the core stake auction in late 2001, but later defaulted on completing the final payment by the 2002 deadline. Telnet Consortium had as technical partners a joint venture comprising Korea Telecom and Sweden’s Swedetel AB that paid the initial commitment fee to inspect facilities. Telnet was a wholly owned Nigerian company. The third was Newtel Consortium, a partnership involving Nigerian and German interests, that qualified for the final bidding stage. Other major international and local companies that showed initial expressions of interest (EOI) earlier in 2001 included France Telecom, Telekom Malaysia, Orascom (Egypt), MSI (Netherlands), and the Dangote Group. Mafab was believed to have joined the industry on wobbly grounds and so encountered storms early in the day.
While MTN and Airtel came prepared for the 5G auction with extensive existing towers, fibre networks, backhaul, and other infrastructure, Mafab anticipated building much of its network infrastructure from scratch as a greenhorn operator.And having got the spectrum, alleged regulatory delays, difficulties connecting sites, foreign-exchange pressures and the rising cost of imported telecom equipment added to its bottlenecks. Its inexperience and lack of expertise and technical partners made matters worse.
Despite obtaining a Unified Access Service Licence (UASL) and numbering plan in July 2022, in preparation to operate as a full telecommunications provider, building a network from scratch was a mountain too difficult to climb. Mafab had what looked like launch events in January 2023, with “incomplete infrastructure that led to a failed commercial rollout and later adopted a more phased approach, focusing deployment on Abuja and Kano before expanding to other markets”, according to analysts. As it navigated through those challenges, established operators continued expanding their 5G networks.
Although not yet established, a major advantage is being gained by MTN, which is already a dominant service provider even as a Mobile Network Operator (MNO). The transaction is still a work in progress, but talks have gone very far, and the conclusion and approval for the transfer would mark a significant reversal for Mafab, which paid $273.6 million in 2021 to secure a 100 MHz block in Nigeria’s first 5G spectrum auction and become one of the country’s two initial 5G operators. “But the transaction is also part of a broader effort by the Nigerian Communications Commission (NCC) to ensure that valuable spectrum is being used efficiently rather than sitting underutilised, “according to one analyst. Stakeholders had expressed misgivings at the time Mafab got the license because of their concerns about the capacity of Mafab to roll out 5G in Nigeria, without an existing telecom infrastructure.
Mafab was an obscure company in 2021 when it was assigned the 5G spectrum. It was relatively small with no footprint as a telecom operator because it had no subscriber base, unlike other established telecom operators in the country. There were no known offices and addresses across the country and no customer care service centres where prospective subscribers could go and make enquiries about their services in order to sign up on its network. There were widespread worries and fears as Nigerians raised questions as to the possibility of a successful rollout of Mafab’s 5G services in the country.
Now their fears have been confirmed. The NCC says it wants to ensure that “limited valuable spectrum is in the hands of those who need it.” The regulator is not averse to secondary sales of spectrum. It maintains frequency assignment tables covering commercial bands including 2.1 GHz, 2.3 GHz, 2.6 GHz and 3.5 GHz, and its spectrum management system requires operators to submit utilisation and interference reports. The regulator says its frequency management framework is designed to promote spectrum discipline and increase efficiency and usage. Mafab is not the only company caught up in this web. Megatech Engineering Limited, which acquired a 2.6 GHz spectrum licence from the NCC in March 2020, subsequently transferred the asset to Globacom in a transaction valued at more than ₦20 billion ($15.01 million).
