The Executive Vice Chairman of the Nigerian Communications Commission (NCC) stated last week that the Nigerian telecommunications industry can expect a new operator this year. This announcement came after Mafab Communications, a relatively unknown telecommunications company, disclosed its intentions to launch to the commission.
Mafab secured a 5G license in December 2021 at an auction with a winning bid of $273.6 million. This acquisition saw them outdo Airtel Nigeria, one of the country’s leading telecoms operators. Mafab has now affirmed that it will construct its infrastructure from the ground up, opting not to purchase or lease from established operators. However, before it proceeds, the company has regulatory issues to address.
Rotimi Akapa, Partner and Head of Telecommunications, Media, and Technology, Advocaat Law Practice, said;
Mafab does not currently have a Universal Access Sẹrvice License (UASL), which is the operational license for the 5G spectrum, and will need to pay a ₦374.6 million fee.
The UASL license will allow them to provide all telecommunications services such as 2G, 3G or any other technology.
The Universal Access Service License (UASL), introduced in 2005, encompasses services like fixed telephony (wired or wireless), digital mobile services (GSM), international gateway services, national long-distance services, and regional long-distance services.
As of this report, the NCC could not confirm whether Mafab had applied for a UASL.
In terms of establishing its infrastructure, Mafab would need to allocate billions of dollars. “I am not sure such funding is presently available locally even if the banks were to be interested,” stated Mr. Akapa.
Mafab experiences hurdles on its journey to market entry
Mafab has made a few attempts to enter the market. For instance, in January 2023, they held launch events in Abuja and Lagos where they spoke about their plans to roll out services within “a few months.” Unfortunately, no product demonstration was provided at these events.
By December 2023, Mafab had started promoting their 5G routers for ₦50,000 on their social media accounts. Their website also includes ‘Get Mcom 5G’ and ‘View Coverage Area’ pages that encourage users to submit recharge requests.
Mafab’s entrance into the market coincides with the telecom industry’s current revenue struggles resulting from inflation and currency devaluation. With their addition, the number of telecom players would increase to five and the number of 5G service providers to three. This increased competition should ideally benefit consumers, providing them with a greater variety of network choices and potential innovation from operators.
However, Mafab will require substantial resources to hire skilled and experienced personnel. There’s also the issue of ensuring consistent power supply for Mafab’s operations, considering that energy costs constitute a significant portion of telco’s expenses in Nigeria. It is anticipated that Mafab would outsource their tower needs, but they would still have to deal with increasing expenses, mainly driven by energy costs.
The good thing is that there are several options open to them: They can opt to pay for the required equipment and software, enter into build-operate-and-transfer arrangements, turnkey arrangements, or even revenue share arrangements.
Akapa
Gbenga Adebayo, President of the Association of Licenced Telecommunication Organisations of Nigeria (ALTON), states that the market is eagerly awaiting Mafab’s launch. More competition in the sector can potentially enhance service quality, ultimately benefiting consumers.
According to two anonymous sources with knowledge of the matter, wealthy local investors with substantial political influence in Nigeria back Mafab.
