Nigeria kicks off telecoms auction

Wireless services are very limited in Nigeria

After several false starts and months of administrative turmoil, Nigeria has launched its sale of mobile phone licences.

The problems that led to the sacking last year of the entire telecoms authority board amid allegations of corruption have been stopped, officials say.

Wireless operators say the market's potential is huge. Nigeria is Africa's most populous country with about 120 million inhabitants but has extremely limited wireless capacity in place.

Egypt's Orascom Telecom, one of the bidders, estimates the market for mobile phone users to be 30 million initially and says it will grow rapidly thereafter.

"We are looking forward very eagerly to [entering] this market," investment director Amani El Feky told BBC News Online.

Dogged by problems

Five international groups are bidding for three global standard for mobiles (GSM) licences, which will be sold in an auction starting on Wednesday.

A fourth licence is being reserved for sale at auction price to Celcom - the recently renamed state-run operator.

The process of awarding licences, though, has been dogged by problems, leaving Nigeria's telecoms network several years behind those of nearby countries such as Ghana and the Ivory Coast.

Fixed telephone lines number fewer than four per thousand people while mobile phone penetration does not even register statistically.

Entire board sacked

One company, Motophone, was awarded a GSM licence by General Sani Abacha's government but the service was never launched.

The next regime sold 27 licences - far more than was ever technically or commercially feasible - but most of these were later cancelled.

More recently, an auction scheduled for last year was scrapped at the last minute and the entire board of the Nigerian Communications Commission - the body supervising the sale - was sacked amid allegations of financial irregularities.

Encouraging competition

In mid-2000, NCC chief executive Ernest Ndukwe hired the UK-government backed consultants Radio Spectrum International to devise and run a new auction.

Since then, several more senior NCC officials have been dismissed, the latest as recently as Monday, according to the French news agency AFP.

"There have been some changes [in the board's membership]," RSI's Peter Top told BBC News Online.

"[But] we have not encountered any problems [in setting up the auction]."

The licence sale, based on a similar auction in the UK last year also devised by RSI, is now finally getting underway.

"[The NCC] is committed to achieving a licensing regime that will spur the rapid roll-out of digital networks and encourage competition," Mr Ndukwe is quoted on the NCC's website as saying.

"Everything is now going smoothly," Ms El Feky adds.

Minimum price $100m

The five bidders are:

• Communication Investments, a group whose backers are reported to include Deutsche Telekom, Deutsche Bank and Dresdner Bank
• South African-backed Econet Wireless Nigeria
• MSI-Celtel Nigeria, a group reported to be backed by two former heads of state and also including US-based Monarch Communications and several private equity firms
• South African-backed MTN Nigeria Communications
• and United Networks Mobile, comprising Orascom and United Bank for Nigeria.

A minimum price for each licence has been set at $100m, with the successful bidders required to provide 100,000 lines each within a year from this May.

The licences will be valid for 15 years.