Operational challenges hamper 5G deployment this month

Few days to the deployment of the Fifth-Generation (5G) network in Nigeria, investigations have shown that the licensees, MTN Nigeria and Mafab Communications, may not be ready to deploy the service from August 24, as a result of lingering infrastructural and licensing challenges.

While MTN claims to have commenced importing some of the equipment required for the service rollout through its vendor, Huawei, Mafab Communications’ plan to roll out within the specified date appears not feasible due to some infrastructure challenges.

Up till the time of this report, Mafab had yet to announce its deployment plans, lending credence to speculations that the firm may warehouse the 3.5GHz spectrum licence and look for a buyer in the future to take it over at a premium.

It should be noted that in the telecoms industry, there is room for spectrum trading but subject to approval of the Nigerian Communications Commission (NCC).

In the new rule set by NCC for spectrum trading unveiled last year, the Commission said, to trade, a seller must have held the spectrum for a minimum of one year, as against the previous requirement of two years. Both the seller and buyer must also have sound regulatory and financial standing with the Commission for a minimum of three years consecutively prior to their engagement.

It should be noted that there had been cases of spectrum trading in the industry. For instance, in 2010, Etisalat purchased Alheri Mobile Services Limited, a fully-owned subsidiary of the Dangote Group in Lagos. Alheri Mobile is a holder of a 3G licence for Nigeria. The acquisition enabled Etisalat Nigeria to have access to full use of a 3G licence in line with the other three GSM operators in the country.

While both MTN and Mafab Communications had coughed out about $550 million for the 3.5GHz spectrum licences after the December 13, 2021 auction conducted by NCC in Abuja, they are required to launch the service from August 24, according to the telecoms regulator.

Checks by The Guardian on both licensees’ readiness showed that MTN, in the first phase, hopes to cover five cities of Lagos, Abuja, Port Harcourt, Kano and Enugu.

In terms of sites to be deployed in the first phase, The Guardian learnt that MTN has prepared about 127 sites in Nigeria for a start. This is because in South Africa, where MTN had deployed the service as far back as June 2020, 100 sites were engaged in cities including Johannesburg, Cape Town, Bloemfontein and Port Elizabeth in the first phase.

“As such, in Nigeria, with a bigger market, at least, they are starting with about 127 sites to further test the waters. You know they have conducted 5G trials. Now, I don’t know how much that will gulp, but building a site costs between $100,000 to $150,000. This is excluding some other costs such as, security, human resources among others. So, there could be additional $50,000 to $70,000 expenses per site. It is not a small investment to set up sites,” a close source stressed.

Indeed, from the figure, it could be said that setting up a site would cost about $220,000. Therefore, the 127 sites planned for the first phase of 5G deployment should cost MTN about $27.9 million.

Dousing tensions around Mafab’s readiness, the firm’s Technical Adviser, Kingsley Uwazie, at a post-event interview in Lagos, said the relative silence from the firm doesn’t mean that it is not working to deploy the technology this month.

Uwazie said after getting the spectrum licence, Mafab also needs to get the Universal Access Service Licence (UASL), which is the operational licence.

“We are waiting to get that from NCC. It is the issue we are trying to sort out currently. We are at the height of it with the regulator. Immediately we conclude that, you will get an official statement from the Chairman of Mafab as to when we are going live with 5G in Nigeria. It may not even be up to August 24 set by NCC, it could be earlier than you think,” he said.

Speaking on speculation of a possible partnership or acquisition of an existing mobile network operator (MNO) that appears struggling to stay afloat in the telecoms market, though with licence and infrastructure spread across the country, the Mafab Communications chief, said: “I cannot answer that question! But the truth is that Mafab Communications wants to come out through any means possible that is equally legit to provide service.

“Yes, we have purchased the 5G licence, but we would look for the best possible means to provide penetration in Nigeria. So, we are looking at various options before us. And like I said, you are not hearing much from Mafab for now, because we are working in the background to ensure we make the best use of the licence we got.

“What we have on the ground is our spectrum and we want to make best use of that. Also, to get our operational licence (UASL), which will allow us to do not just 5G, but even 4G, 3G and others, and whatever you are saying or speculating may fall into that.”

In the Transaction Teaser of Mafab Communications Limited, seen earlier in the year, the firm had proposed to raise $350 million via equity to finance the spectrum licence cost and other associated project fees, which it not only got, but enabled it to pay for the spectrum fee by February 24 deadline date.

Mafab Communications is an indigenous company incorporated in 2020 and licenced to provide and operate local interconnect and international carrier services. The company is currently a subsidiary of Althani Group of Companies Limited, a company established 15 years ago with a yearly turnover of over $450 million.

The company also holds an operational interest in the banking, insurance, hospitality and telecommunication spheres of the Nigerian economy.

According to the document, Mafab Communications set a five-year target, which would see it deploy over 6,000 sites in the country. In the first year of deployment, Mafab is targeting 1.5 million subscriber growth from 1,000 sites rollout; to increase to three million from 3,000 sites by year two.

By the third year, the firm is looking at 4,000 sites and five million customers; the fourth year would see 5,000 site rollouts and six million users, and by the fifth year, site rollout should have increased to 6,000 and a subscription base of 7.5 million.

Indeed, the final Information Memorandum (IM) of the 3.5GHz spectrum informed that the 5G auction comes with a 10-year spectrum licence and a minimum requirement of an operational UASL.

According to the document, “where a winner does not hold a Unified Access Service Licence (UASL), which is the operational licence for the frequency spectrum slated for auction, it will be issued at an additional fee of N374,600,000 only, or at the subsisting licence fee at the time of the auction.”

The 5G eventual licensees will have a rollout obligation plan spanning 10 years, beginning from the date of award of the licence. Between the first and second year of the licence, the operators are expected to roll out service in, at least, one state in each geo-political zone.

From the third to fifth year, they are obligated to cover all the zones. Between six to 10 years, they should cover all the states in the country, according to guidelines set out in the IM. The spectrum lot won by each bidder will be assigned on a nationwide basis covering all the 36 states of the federation and the Federal Capital Territory (FCT) on a subsisting policy on “use-it or lose-it” concerning the use of assigned Spectrum.

Indeed, in other climes where operators have deployed 5G, it costs an average of $750 million to roll out the service. For instance, Dish Network, with a base in the USA, previously pegged the cost of building a new 5G network at $10 billion. But in its Q4 2020 report, the operator expended between $250 million and $500 million on wireless capital expenditure (CAPEX).

While some analysts predict that 5G will add $2.2 trillion to Africa’s economy by 2034, the Global System for Mobile telecommunications Association (GSMA) disclosed that 5G roll-out for the top 10 cities in Nigeria would require an estimated 6,000 base stations to be deployed at a cost of up to $500 million.

 

MEANWHILE, speaking on 5G technology in Lagos, Director, ICT Strategy and Marketing, Huawei, Ashwani Mishra, who said they are in partnership with MTN on the deployment of the technology, also confirmed that as a vendor, Mafab Communications had also approached the firm for equipments to be deployed.

Advising on how the country can succeed with the deployment, Mishra said operators must focus on phase deployment to test the success before expanding it to other territories.

While stressing that it is important for the government to reduce spectrum cost, Mishra said the government should encourage terrestrial fibre deployment by removing bottlenecks surrounding Right of Ways (RoW) and multiple taxations.

As Nigeria waits earnestly for the takeoff, analysis by QuartzAfrica says Africa’s 5G first movers are facing teething problems that threaten to delay their 5G operational goals. The challenges revolve around spectrum regulation clarity, commercial viability, deployment deadlines, low purchasing power of 5G-enabled smart-phones and cost of data.

For instance, Safaricom, the operator leading 5G adoption in Kenya, said the high cost of 5G-enabled smart-phones is slowing down the company’s ambition to offer mobile 5G services. Findings showed that the cheapest smart-phone with a 5G-enabled in the continent goes for about $300, which is very expensive for the average African.

Meanwhile, Ethiopia has joined Botswana, Egypt, Gabon, Kenya, Lesotho, Madagascar, Mauritius, Nigeria, Senegal, Seychelles, South Africa, Uganda and Zimbabwe in test-running or deploying 5G. But many of these countries are facing delays.

Botswana’s Mascom has successfully unveiled 5G to residents of the capital, Gaborone. It started with four sites in the city with a plan to lay more than 100 base stations by the end of 2022.

Last February, Orange received a spectrum from the Egyptian government that now allows it to test 5G networks just like Vodafone Egypt, Egypt Telecom and Etisalat Egypt. Though promising, Egyptians will have to wait for 5G services.

QuartzAfrica said since it started testing the technology in November 2019, Gabon Telecom is yet to go commercial. Its CEO is targeting 2023.

The platform observed that Kenya has been testing the technology for a year now, but Internet subscribers would have to wait till end of the year when the country’s telecoms regulator is expected to have issued mobile operators with 5G licences. The country is expected to account for more than half of the continent’s tiny number of 5G mobile subscriptions in 2026.

In Lesotho, it said since Vodacom was given a temporary spectrum by the government in 2018 to experiment with 5G technology, it has been a journey of pain. It noted that wrangles between Vodacom, Econet and the regulator have hindered any meaningful 5G roll-out.

In July 2020, Madagascar’s Telma followed South Africa to launch a commercial 5G but three weeks later, the country’s regulator told the company to halt its plans.

On July 30, last year, the platform said the government of Mauritius announced the country’s first 5G network deployment to cover four zones but didn’t share plans for a fully commercial roll-out.

“In Nigeria, the continent’s largest economy issued spectrum licences in March and is hoping to possess the widest 5G network on the continent this year. It is looking at August for commercial deployment.

“Since their first 5G tests in November 2020, Senegal’s Sonatel and Orange continue to do several trials in Dakar but the network remains largely inoperational. Citizens greeted the country’s 5G launch in 2020 with mistrust, expressing concern over health hazards. A year later, citizens in six regions are getting faster speeds of 1.2Gbps from Cable and Wireless Seychelles, for up to 100GB of use,” it stated.

According to the platform, South Africa, the continent’s earliest adopter of 5G rolled out the technology on a temporary spectrum, but amid heavy strain on networks during the pandemic, Vodacom, Rain, and MTN were ordered to suspend that use from November 2021. In March, the country earned nearly $1 billion from its long-awaited 5G spectrum auction.

In January 2020, Uganda became the first East African nation to test the possibility of launching a 5G network with ZTE and MTN. But a commercial launch is yet to happen.

On Feb. 24, Zimbabwe’s Econet announced that it had launched the country’s first 5G network and would activate two dozen sites by this month.