NIGERIA?S government says it is aiming for a GSM mobile phone licence price of over $300m as bidding for three licences heads for a third day with all five bidders – including South African-owned MTN Nigeria and Johnnic?s M-Cell – still in contention.
In a country where telecommunications are normally abysmal, the Nigerian Communications Commission (NCC) said it was forced to halt bidding on Thursday in line with regulations when the price shot to $225m, or 50% above the day’s opening level.
”I think this is a very interesting time for Nigeria,” NCC’s Chief Executive Ernest Ndukwe told reporters. ”It is also a vote of confidence in the economy, a vote of confidence in the Nigerian market as a major market in Africa.”
”We will be edging up to $337m. That will be the upper limit for Friday,” Ndukwe added, referring to the daily bid cap rise regulation.
But some analysts and Nigerian politicians aren’t so sure the soaring license price is good for the Nigerian consumer, who might be charged higher prices by investors trying to recoup costs.
”In terms of national pride, we have made the point that we are not giving away state assets for nothing,” lawmaker Nduka Irabor said. ”But at some stage we’ll have to ask if the companies can deliver the service at a given price.”
NCC remained adamant that competition among the eventual four mobile network operators would ensure market forces and not investment costs dictated prices.
”I have assumed all along that these are tough, hard-nosed investors who have done their math right,” NCC Chairman Ahmed Joda said.
”That they are still in the race means that they are sure there is the market in Nigeria,” he added.
But industry analysts argue that stringent roll-out requirements, heavy investment outlay, and fierce competition could hit profit margins seriously.
”I know that at least one bidder has ruled out financing the investment with bank loans,” one analyst said.
He added that the current level of the licence price and the roll-out requirements would force eventual licensees to lean more toward equity financing.
Front-runner United Networks Mobile Ltd., whose foreign partner is Egypt’s Orascom Telecom Holdings SAE, asked for time to make a decision when the price jumped to $178m. It later decided to stay in the contest. – Reuters