NCA cuts digital divided spectrum auction price by 27%

The National Communications Authority (NCA) has reduced the minimum reserve price of the two lots it is offering in the 800MHz spectrum band harvested from the digital migration by some 27 per cent following a unanimous request from interested parties.

When NCA opened public consultation earlier this year, the minimum auction price for any one of the bands on offer was $92million plus. But upon requests from the eight institutions and individuals who showed interest, it has reduced the price to $67.5 million per band.

The specific bands up for grabs at that minimum auction price are two of the 2x10MHz bands within that 800MHz spectrum.

This is contained in the announcement of the NCA's final decision on the digital dividend spectrum sale following the closure of public consultation in June this year.

The eight respondents to the consultation documents were Airtel Ghana, Scancom Limited (MTN), Ghana Telecom Limited (Vodafone), Millicom Group (Tigo), the Telecoms Chamber, Qualcomm International Incorporated, one Dr. Adam Icarus Imoro and a team of the three Broadband Wireless Access (BWA) license holders/4G LTE players, namely Surfline, Blu and Goldkey.

The NCA said it took note of the "almost" unanimous concerns raised about the proposed minimum price and its potential to limit the attainment of some of the stated objectives such as Ghanaian participation and universal access to affordable data among other things.

The respondents also pointed to the potential of the high proposed minimum price to erode initial rollout capital and ultimately affect expect taxes from the service.

But the minimum price of $67.5million is only the initial price when the two lots go for auction later this year. The actual price any of the two would be sold for would depend entirely on the best offer from the number of offers by participants.

The auction will open up the 4G LTE space for existing 3G telcos to go in, and even for additional new entrants into Ghana's telecom industry.

The consumer is expected to be the better for it, but not all players are particularly enthused about it.

4G LTE players concerned

The NCA said a licensee may use the spectrum for any form of electronic communication permissible under the laws of the country (i.e. voice and data), and that makes the BWA licensees/4G LTE players nervous because their current license limits them to only data services until they provide 60% coverage in all district capitals in the country. They have five years to do so.

The BWA licensees therefore appealed for the auction to either be after their five years limited service period elapses or eligibility to participate in the auction be limited exclusively to the three of them already in the 4G LTE space.

Their concerns stemmed from the fact that the spectrum bands available for auction would allow the eventual licensees offer 4G LTE and that would not be fair to the existing players which are still at their incubation stage and have been limited to only data.

They therefore requested for protection or for a review of their current license terms that limits them to only data for up to five years.

Other telcos also asked for more time to prepare adequately for the auction.

But the NCA maintained it will go ahead with the auction this year and open it to all interested parties because it needs to raise money to pay for the digital terrestrial transition (DTT) network rollout for which government has already signed contracts with players in that space.

On the request for a review of the limitation to data services for five years, NCA said it would look at it in the public consultation for universal access licenses next year.

Moreover the BWA license holders also have the chance, like anybody else, to acquire this new license and start providing voice services ahead of five years limitation on their previous license.

Meanwhile, eventual license holders for this new 800MHz spectrum would also be given six years to cover all district capitals with their voice and data services.

35 per cent local content
The eligibility criteria require ownership of a license should either be fully Ghanaian or at least 35% for private indigenous Ghanaians.

The following is a list if the eligibility criteria as spelt out in the NCA's final decision.

a. The applying Entity must be registered under the laws of Ghana, and duly certified to operate in Ghana.

b. Entities with foreign ownership shall have a minimum of 35% private indigenous Ghanaian ownership in the applying Entity; be it a company, a joint venture or

consortium.
i. Applicants who do not meet this criteria at the time of applying should submit a letter of commitment, signed by the Authorised Representative, to have the minimum 35% Ghanaian ownership in place within 13months from the effective date of the license failing which the license duration shall be reduced by 2years in the first instance of the deadline and by an additional 1year for each year in which the Ghanaian ownership threshold is violated.

ii. The minimum Ghanaian ownership shall be maintained throughout the duration of the License

iii. Entities with foreign ownership shall register with the Ghana Investment Promotion Centre (GIPC) before commencement of service in accordance with Section 24 of the Ghana Investment Promotion Centre (GIPC) Act, 2013 (Act 865).

iv. Listing on the Ghana Stock Exchange in accordance with the the Ghana Stock Exchange Listing Regulations 1990 (LI 1509) shall be accepted as a mechanism to meet the minimum Ghanaian shareholding requirement, where necessary.

c. An Entity shall be eligible for only one spectrum block in the 800MHz; that is, no Entity alone or along with its partner, affiliate, subsidiary or shareholder in total, can apply for more than one license.

Meanwhile, there is a third 2x10MHz band slot in the 800MHz spectrum to be sold, and the NCA said it will work to clear it in due course.

There are other slots within the 700MHz spectrum band. Industry players wanted those slots to be auctioned together with the current one, but the NCA said it will auction that later.