One bidder out in Nigerian mobile phone auction
An auction of licenses to operate three mobile phone networks in Nigeria was poised to end Friday as one bidder dropped out and two balked at a price of $295 million a license.
United Networks Mobile Ltd., a Nigerian-led consortium backed by Egypt's Orascom Telecom, dropped out of the auction for a mobile phone license on the third day of the auction which began Wednesday.
Orascom Telecom (OT) operates mobile phone networks in 20 countries in Africa, the Middle East and Asia, and was a powerful backer of the consortium led by Nigerian banking group United Bank for Africa.
The bidding in the auction began Wednesday with the three available licenses set at $100 million. The bidding resumed Thursday and prices rose after two rounds to $178 million, senior Nigerian telecoms official Ernest Ndukwe said.
At that stage, the four other bidders all agreed to the price, while United Networks asked for a waiver while continuing to the next round, he said. Each bidder is entitled to maximum of three waivers while remaining in the auction.
When bidding resumed, the price moved up to $200 million, at which stage all five consortiums agreed to remain in the bidding. Two more rounds of bidding took place Thursday with a maximum price during the day of $225 million.
Two of the four remaining consortiums in the auction asked for "waivers", one of them their third of the day, allowing them remain in the bidding without making a definite answer.
The consortium MIS-Celtel were to be required to give a final answer in the fifth round of bidding later Friday after taking their third of three allowed waivers. South African group MTN Nigeria Ltd. was the other group to ask for a waiver — its first.
Four consortiums were to go through to the next rounds. A fourth license to operate a GSM mobile network has been granted already to the newly renamed state-run operator Celcom.
The government has stated that Celcom will pay the same as agreed by the three auction winners for its license. The government has also pledged it will sell off Celcom as part of the privatization of its parent company, state-run operator NITEL, due this year.
The windfall generated by the sale will provide a powerful boost to the cash-strapped and heavily indebted Nigerian government seeking to shore up its finances after years of plundering under military rule.
Enrest Ndukwe, head of the Nigerian Communications Commission (NCC) responsible for overseeing the telecoms market, told AFP late Thursday he was pleased with the way the auction, run by British firm Radio Spectrum International, was going.
"It has been very impressive. It has been a very good process. We are very pleased with the outcome and we believe that very soon we will have three qualified bidders," he said.
Nigeria, Africa's most populous country with more than 120 million people, has one of the continent's least-developed telecommunications sectors, hence one of the greatest potentials for expansion.
"It is a vote of confidence in the Nigerian telecoms market," Ndukwe said. "These networks will initiate a telecoms revolution in Nigeria."
Ndukwe said he did not believe the cost of the 15-year licenses would unduly affect the cost of services to end-users. "I don't know anywhere where the cost of the licenses has contributed to a high price of services ... We will have a very competitive environment with four operators. Competition will take care of the pricing of services," he said.
The five consortiums in the bidding are: Communications Investment Ltd. (CIL); Zimbabwe-based Econet Wireless Nigeria Ltd.; MSI-Celtel Nigeria Ltd. and South Africa-based MTN Nigeria Ltd. The winners will be required to redeem their bids within 14 days and start operating within three months. — (AFP, Abuja)
by Ola Awoniyi
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)