1 presentation on new spectrum fees and pricing strategy to nigerian telecommunications operators 11...

11

PRESENTATION ON NEW SPECTRUM PRESENTATION ON NEW SPECTRUM FEES FEES

AND PRICING STRATEGYAND PRICING STRATEGY

ToToNigerian Telecommunications OperatorsNigerian Telecommunications Operators

1111thth December, 2002 December, 2002

22

BACKGROUNDBACKGROUND

Ministry of Communications had a Ministry of Communications had a spectrum pricing formula they have spectrum pricing formula they have been using over the years, which our been using over the years, which our study has revealed to be defective in study has revealed to be defective in certain aspects.certain aspects.

A detailed analysis of the records of A detailed analysis of the records of previous spectrum allocation by the previous spectrum allocation by the MOC revealed the following facts:MOC revealed the following facts:

33

BACKGROUND CONT’DBACKGROUND CONT’D

Spectrum was priced on a per-subscriber Spectrum was priced on a per-subscriber

basis, however, it was observed that there basis, however, it was observed that there were lots of inconsistencies on the amount were lots of inconsistencies on the amount charged per subscriber. charged per subscriber.

While some were charged 50,000 per While some were charged 50,000 per subscriber other charged 5,000 or 2,500 per subscriber other charged 5,000 or 2,500 per subscriber on exactly same spectrum band.subscriber on exactly same spectrum band.

44

BACKGROUND CONT’DBACKGROUND CONT’D

Frequency licence was renewable every Frequency licence was renewable every yearyear

Frequency assignments were not Frequency assignments were not accompanied with accompanied with license conditions to license conditions to enable each assignee know his enable each assignee know his rights rights and obligations, e.g. fees renewal etcand obligations, e.g. fees renewal etc

55

RESULTSRESULTS

• There were lots of inconsistency and There were lots of inconsistency and discrimination in pricing.discrimination in pricing.

• Fees tied to subscriber base were Fees tied to subscriber base were punitive, discouraged expansion and punitive, discouraged expansion and efficient use of spectrum and led to false efficient use of spectrum and led to false declaration of actual subscriber base by declaration of actual subscriber base by operators.operators.

66

RESULTS CONT’DRESULTS CONT’D

Annual frequency licence increased administrative Annual frequency licence increased administrative overhead cost, constituted insecurity for investors overhead cost, constituted insecurity for investors and encourages licence renewal evasion. and encourages licence renewal evasion.

Strong protest by operators.Strong protest by operators.

Loss of confidence in the licensing process by Loss of confidence in the licensing process by investors.investors.

Higher cost of services to consumersHigher cost of services to consumers..

77

METHODS OF DETERMINING METHODS OF DETERMINING SPECTRUM PRICES SPECTRUM PRICES

(INCLUDING ADVANTAGES (INCLUDING ADVANTAGES

AND DISADVANTAGES)AND DISADVANTAGES) SourceSource: : ITU Spectrum Management ITU Spectrum Management

Handbook and other Handbook and other references.references.

88

LEAST COST ALTERNATIVE LEAST COST ALTERNATIVE OR OPPORTUNITY COST OR OPPORTUNITY COST

CRITERIA.CRITERIA.

• The alternatives to spectrum are copper network, optical The alternatives to spectrum are copper network, optical

fibre or coaxial cable. fibre or coaxial cable.

• May lead to artificially high prices.May lead to artificially high prices.

• Cost of alternatives difficult to determineCost of alternatives difficult to determine..

99

A PROPORTION OF REVENUE DERIVED A PROPORTION OF REVENUE DERIVED FROM THE LICENSEE’S USE OF RADIO FROM THE LICENSEE’S USE OF RADIO

SPECTRUMSPECTRUM

Simple and generates economic value.Simple and generates economic value.

May discourage investment and growth.May discourage investment and growth.

Revenue may not be directly related to economic Revenue may not be directly related to economic value of spectrum.value of spectrum.

May suppress usage and impair innovationMay suppress usage and impair innovation..

1010

FEES BASED ON ECONOMIC COST FEES BASED ON ECONOMIC COST ASSOCIATED WITH THE USE ASSOCIATED WITH THE USE OF OF

THE SPECTRUM BY A LICENSEETHE SPECTRUM BY A LICENSEE..

Cost of network infrastructure increases as Cost of network infrastructure increases as operating frequency increases.operating frequency increases.

Promotes efficiency.Promotes efficiency.

Promotes competition.Promotes competition.

Difficult to estimate and quite sophisticated.Difficult to estimate and quite sophisticated.

Useful in determining auction reserve prices.Useful in determining auction reserve prices.

1111

FEES BASED ON THE ADMINISTRATIVE FEES BASED ON THE ADMINISTRATIVE COST OF SPECTRUM MANAGEMENT COST OF SPECTRUM MANAGEMENT

FUNCTIONSFUNCTIONS

• Administrative costs includes: Record-Keeping, Monitoring, Administrative costs includes: Record-Keeping, Monitoring, Licensing, e.t.cLicensing, e.t.c

• Useful for pricing non-commercial spectrum usage.Useful for pricing non-commercial spectrum usage.

• Full recovery of administrative cost.Full recovery of administrative cost.

• Compensation for exclusive use of public resource.Compensation for exclusive use of public resource.

• Price does not reflect economic or market price of Price does not reflect economic or market price of spectrum.spectrum.

1212

BENCHMARKING: FIXING SPECTRUM BENCHMARKING: FIXING SPECTRUM FEES BASED ON WHAT OBTAINS IN FEES BASED ON WHAT OBTAINS IN

OTHER COUNTRIES OR OTHER COUNTRIES OR INTERNATIONAL PRICES.INTERNATIONAL PRICES.

Price comparison should be made only with Price comparison should be made only with

countries with similar economic conditions and countries with similar economic conditions and level of development.level of development.

May lead to price distortions as a result of varying May lead to price distortions as a result of varying economic indices from country to country.economic indices from country to country.

1313

NCC’S APPROACHNCC’S APPROACH

1414

INTRODUCTIONINTRODUCTION

In line with common practice, the price of spectrum In line with common practice, the price of spectrum for commercial applications will be determined by for commercial applications will be determined by competitive methods to be competitive methods to be selectedselected by NCC from by NCC from time to time.time to time.

These will includeThese will include,, but but are are not limited tonot limited to,, auction, auction, Beauty contest, etc.Beauty contest, etc.

TheThe method selected method selected ensures that frequency ensures that frequency resource getresource getss into the hands of those who will into the hands of those who will make the most efficient use of it.make the most efficient use of it.

1515

NCC’s CONSIDERATIONSNCC’s CONSIDERATIONS

Price of spectrum should reflect market or economic value.Price of spectrum should reflect market or economic value.

Spectrum fee should be directly proportional to spectrum Spectrum fee should be directly proportional to spectrum size.size.

Incentive fee approach adopted in order to achieve Incentive fee approach adopted in order to achieve government policy objectives and NCC goals.government policy objectives and NCC goals.

i.i. Even development of the countryEven development of the countryii.ii. Universal access and serviceUniversal access and service

1616

NCC’s CONSIDERATIONSNCC’s CONSIDERATIONS CONT’DCONT’D

Price of spectrum will vary from State to State.Price of spectrum will vary from State to State.

Price of spectrum will not be based on number of Price of spectrum will not be based on number of subscribers in order to encourage efficient use of subscribers in order to encourage efficient use of spectrum and stimulate growth.spectrum and stimulate growth.

Adequate consultation with all stakeholders.Adequate consultation with all stakeholders.

1717


• Fee mechanism should be simple, easily understood and Fee mechanism should be simple, easily understood and

predictable. predictable.

• Fees structure must fully recover administrative cost of Fees structure must fully recover administrative cost of spectrum management.spectrum management.

• Standard licence duration will be 5 years in order to Standard licence duration will be 5 years in order to ensure tenure security and bring it in line with the ensure tenure security and bring it in line with the duration of NCC’s operating licenses.duration of NCC’s operating licenses.

1818


The result of the recently concluded FWA auction process The result of the recently concluded FWA auction process has been used as a basis for the determination of spectrum has been used as a basis for the determination of spectrum fees by NCC. fees by NCC.

The bid values are a reflection of the ‘market value’ of The bid values are a reflection of the ‘market value’ of spectrum. spectrum.

Other factors considered are: Spectrum size; Demand Other factors considered are: Spectrum size; Demand pattern from band to band; Licence duration; Price variation pattern from band to band; Licence duration; Price variation from State-to-State; Shared and Exclusive spectrum use, etc. from State-to-State; Shared and Exclusive spectrum use, etc.

NCC has come out with a pricing formular for spectrum the NCC has come out with a pricing formular for spectrum the details of which are shown in annex ‘A’.details of which are shown in annex ‘A’.

1919

LICENSING POLICY AND PRICE LICENSING POLICY AND PRICE

DETERMINANTSDETERMINANTS For the purpose of frequency licensing, the country For the purpose of frequency licensing, the country

has been divided into licensing areas, which has been divided into licensing areas, which correspond to the 36 states and the Federal Capital correspond to the 36 states and the Federal Capital Territory.Territory.

Frequency license for wireless local loop services will Frequency license for wireless local loop services will henceforth be issued on henceforth be issued on thethe basis basis of the above of the above licensing areaslicensing areas..

Spectrum fees henceforth will vary from state to Spectrum fees henceforth will vary from state to state in accordance with market potentials and level state in accordance with market potentials and level of economic activities. For this purpose, the 37 of economic activities. For this purpose, the 37 licensing areas (states) of the federation have been licensing areas (states) of the federation have been categorized into tiers as follows:categorized into tiers as follows:

2020

LICENSING POLICY AND PRICE LICENSING POLICY AND PRICE DETERMINANTS CONT’D (TIERING DETERMINANTS CONT’D (TIERING

OF THE COUNTRY)OF THE COUNTRY)

Tier 1 Lagos

Tier 2 Rivers, FCT, Delta, Kano, Kaduna,

Tier 3 Ogun, Edo, Oyo, Anambra, Abia,

Tier 4 Enugu, Akwa Ibom, Benue, Ondo, Bayelsa, Plateau, Cross Rivers, Imo, Osun, Niger, Kwara, Kogi, Borno, Bauchi,

Tier 5 Nassarawa, Gombe, Ebonyi, Adamawa, Ekiti, Jigawa, Katsina, Kebbi, Sokoto, Taraba, Yobe, Zamfara

2121

LICENSING POLICY AND PRICE LICENSING POLICY AND PRICE DETERMINANTS CONT’DDETERMINANTS CONT’D

The price of spectrum will vary according to frequency band. The price of spectrum will vary according to frequency band.

Band price will reflect the level of congestion in the bandBand price will reflect the level of congestion in the band,, market demand and the relative cost of deploying network market demand and the relative cost of deploying network infrastructures.infrastructures.

To encourage efficient use of spectrum, fees payable will not To encourage efficient use of spectrum, fees payable will not be based on subscriber population.be based on subscriber population.

The more you use, the more you pay. The price of spectrum The more you use, the more you pay. The price of spectrum will be directly proportionate to the size of spectrum will be directly proportionate to the size of spectrum assigned. assigned.

2222

LICENSING POLICY AND PRICE LICENSING POLICY AND PRICE DETERMINANTS CONT’D DETERMINANTS CONT’D (LICENSE (LICENSE

DURATION)DURATION) The under listed tenure period will apply to The under listed tenure period will apply to

frequency licensesfrequency licenses

1) Short Term Permit1) Short Term Permit <=<= 3months3months(Not Renewable)(Not Renewable)

2) Medium Term License2) Medium Term License = = 1 Year1 Year(Renewable)(Renewable)

3) Long Term License3) Long Term License >>== 55 Year Year (Renewable)(Renewable)

2323

LICENSING POLICY AND LICENSING POLICY AND PRICE DETERMINANTS PRICE DETERMINANTS

CONT’DCONT’D The standard duration of frequency license iThe standard duration of frequency license iss 5 5

years.years.

The duration of license will be determined on case-The duration of license will be determined on case-by-case basis, but spectrum fees will be directly by-case basis, but spectrum fees will be directly proportional to duration.proportional to duration.

Shared Spectrum:- Spectrum that is capable of Shared Spectrum:- Spectrum that is capable of being shared by many users, e.g. DECT and being shared by many users, e.g. DECT and Microwave Links, will be assigned under Microwave Links, will be assigned under class class licenseslicenses. .

2424

LICENSING POLICY AND PRICE LICENSING POLICY AND PRICE DETERMINANTS CONT’DDETERMINANTS CONT’D

Annual License Tenure: NCC encourages long-term tenure Annual License Tenure: NCC encourages long-term tenure for licensesfor licenses.. HHence unit frequency fees will be based on a ence unit frequency fees will be based on a standard five year license term.standard five year license term.

Present operators who prefer annual payment for licenses will Present operators who prefer annual payment for licenses will be allowed the option as a special case. be allowed the option as a special case.

Simplex Channels: A simplex channel frequency allocation Simplex Channels: A simplex channel frequency allocation (TDD) will cost half of an equivalent Duplex Channel(TDD) will cost half of an equivalent Duplex Channel

2525

PRICING FORMULAPRICING FORMULA

For existing license holders and for future frequency For existing license holders and for future frequency assignments, fees schedule and pricing mechanism assignments, fees schedule and pricing mechanism detaildetaileded below will apply. below will apply.

The Pricing regime will be applicable to all frequency The Pricing regime will be applicable to all frequency assignments by NCC and renewals.assignments by NCC and renewals.

The price per MHz of Spectrum for the different Tiers for a The price per MHz of Spectrum for the different Tiers for a five year license term is given in tables below.five year license term is given in tables below.

These prices per MHz may be adjusted from time to time These prices per MHz may be adjusted from time to time by the Commission for new frequency licenses in response by the Commission for new frequency licenses in response to market trends.to market trends.

2626

UNIT PRICE PER MHZ FOR EACH LICENSING REGION UNIT PRICE PER MHZ FOR EACH LICENSING REGION

AND FOR A FIVE-YEAR STANDARD LICENCEAND FOR A FIVE-YEAR STANDARD LICENCE LICENSING REGIONLICENSING REGION UNIT PRICE PER UNIT PRICE PER

MHZ/5YEARS( N)MHZ/5YEARS( N)

Tier 1:Tier 1: LagosLagos

N14millionN14million

Tier 2 :Tier 2 : Abuja FCTAbuja FCT Kano StateKano State Rivers StateRivers State Kaduna StateKaduna State Delta StateDelta State

N 7millionN 7million in each Region in each Region

2727

UNIT PRICE PER MHZ FOR EACH LICENSING REGION UNIT PRICE PER MHZ FOR EACH LICENSING REGION AND FOR A FIVE-YEAR STANDARD LICENCE CONT’DAND FOR A FIVE-YEAR STANDARD LICENCE CONT’D

Tier 3:Tier 3: Anambra StateAnambra State

Edo StateEdo State

Ogun StateOgun State

Abia StateAbia State

Oyo StateOyo State

N 5.5millionN 5.5million in each in each RegionRegion

2828


Tier 4:Tier 4: Akwa Ibom StateAkwa Ibom State Bauchi StateBauchi State BayelsaBayelsa BenueBenue BornoBorno Cross-RiverCross-River EnuguEnugu ImoImo KogiKogi KwaraKwara NigerNiger OndoOndo OsunOsun PlateauPlateau

N 3millionN 3million in each Region in each Region

2929


Tier 5:Tier 5: AdamawaAdamawa EbonyiEbonyi EkitiEkiti GombeGombe JigawaJigawa KatsinaKatsina KebbiKebbi NasarawaNasarawa SokotoSokoto TarabaTaraba YobeYobe ZamfaraZamfara

N 1.5N 1.5 millionmillion in each in each Region Region

3030

PRICING FORMULA PRICING FORMULA CONT’DCONT’D

The price of spectrum for a licensing region will be The price of spectrum for a licensing region will be calculated using the formula below:calculated using the formula below:

Spectrum Fee = (Unit Price)(B)(KSpectrum Fee = (Unit Price)(B)(K11)(K)(K22) per state) per state

Where B = assigned bandwidth in MHz or Spectrum Where B = assigned bandwidth in MHz or Spectrum size in MHz.size in MHz.

KK11 = Band factor = Band factor = 1 for 3.5GHz Band= 1 for 3.5GHz Band = 1.6 for 1.8/1.9GHz Band= 1.6 for 1.8/1.9GHz Band = 1.4 for 800/900GHz Band= 1.4 for 800/900GHz Band = 1.2 for 2.3-2.5 GHz Band= 1.2 for 2.3-2.5 GHz Band = 0.8 for 10.5GHz Band= 0.8 for 10.5GHz Band

For Bands Higher than 10.5GHz, the factor, K1, will be For Bands Higher than 10.5GHz, the factor, K1, will be determined as the bands are allocated.determined as the bands are allocated.

3131

PRICING FORMULA PRICING FORMULA CONT’DCONT’D

KK22 == Tenure duration factorTenure duration factor

= 1 for 5-year license (standard)= 1 for 5-year license (standard)

= 1.8 for 10-year license= 1.8 for 10-year license

= 2.6 for 15-year license= 2.6 for 15-year license

Duplex/SimplexDuplex/Simplex: For Simplex channel, unit : For Simplex channel, unit price per state will be half of equivalent price per state will be half of equivalent duplex channel.duplex channel.

3232

CLASS LICENCE FOR CLASS LICENCE FOR FREQUENCYFREQUENCY

Spectrum bands, which have Spectrum bands, which have possibility of being shared among possibility of being shared among large number of users will be assigned large number of users will be assigned under class licences. under class licences.

These include microwave frequencies, These include microwave frequencies, DECT frequencies and point-to-point DECT frequencies and point-to-point VHF/UHF radio channels.VHF/UHF radio channels.

3333

CLASS LICENCE FOR FREQUENCYCLASS LICENCE FOR FREQUENCYMICROWAVEMICROWAVE CONT’DCONT’D

(PRICING FORMULA)(PRICING FORMULA)

F2F2 == Bandwidth FactorBandwidth Factor

3.5 MHz3.5 MHz == 117 MHz7 MHz == 2214MHz14MHz == 4428MHz28MHz == 8856MHz56MHz == 1616

NN == Total number of RF Channels (for Total number of RF Channels (for

N+1 N+1 Systems)Systems)

3434

CLASS LICENCE FOR FREQUENCYCLASS LICENCE FOR FREQUENCYMICROWAVEMICROWAVE CONT’DCONT’D

All microwave frequency licenses are All microwave frequency licenses are subject to renewal latest 31subject to renewal latest 31stst December of December of every year.every year.

Microwave frequencies are not licensed on Microwave frequencies are not licensed on state basis.state basis.

3535

TABLE 1: FINANCIAL IMPLICATION TABLE 1: FINANCIAL IMPLICATION OF THE FORMULAOF THE FORMULA

ON MICROWAVE LICENCESON MICROWAVE LICENCES

Band (GHz)

Channel Spacing (MHz)

Computation of Price Per Hop Price per Hop per Annum

6 20/29.65 N18,000 x 1 x 8 = 144,000 N144,000

7 28 N18,000 x 1 x 8 = 144,000 N144,000

8 7 N18,000 x 1 x 2 = 36,000 N36,000

13 28 N18,000 x 0.8 x 8 = 115,200 N115,200

15 14 N18,000 x 0.7 x 4 = 50,000 N50,000

18 3.5 N18,000 x 0.7 x 1 = 12,600 N12,600

18 56 N18,000 x 0.7 x 16= 201,600 N201,600

23 7 N18,000 x 0.5 x 2 = 18,000 N18,000

3636

CLASS LICENCE FOR FREQUENCYCLASS LICENCE FOR FREQUENCY CONT’D DECTCONT’D DECT

A simplex channel frequency allocation A simplex channel frequency allocation (TDD) will cost 50% of equivalent duplex (TDD) will cost 50% of equivalent duplex channelchannel

On this basis Frequency fee for DECT On this basis Frequency fee for DECT

allocations will be derived from the allocations will be derived from the following formula given below.following formula given below.

3737



Price Per Licensing Area =Price Per Licensing Area = B(Unit Price)(0.5)(K1)(K2)B(Unit Price)(0.5)(K1)(K2)

Where Where BB == Assigned bandwidthAssigned bandwidth

K1K1 == Band factorBand factor3.5 GHz Band3.5 GHz Band == 111.8/1.9 GHz Bands1.8/1.9 GHz Bands == 1.61.6800/900 MHz Bands800/900 MHz Bands == 1.41.42.0 – 2.5 GHz Bands2.0 – 2.5 GHz Bands == 1.21.210.5 GHz Bands10.5 GHz Bands == 0.80.8

For Bands Higher than 10.5GHz, the factor, K1, will be determined For Bands Higher than 10.5GHz, the factor, K1, will be determined as the bands are allocated.as the bands are allocated.

3838



K2K2 == Tenure FactorTenure Factor

== 5 year license term5 year license term == 11

== 10 year license term10 year license term == 1.81.8

== 15 year license term15 year license term == 2.62.6

3939

CLASS LICENCE FOR FREQUENCYCLASS LICENCE FOR FREQUENCY CONT’D POINT-TO-POINT/PRIVATE CONT’D POINT-TO-POINT/PRIVATE

MOBILE RADIO/TRUNK RADIOMOBILE RADIO/TRUNK RADIO

To be advised.To be advised.

4040

COMPARISON OF COMPARISON OF NEW Vs OLDNEW Vs OLD

4141

SPECTRUM FEES BASED ON SPECTRUM FEES BASED ON NCC’s FORMULANCC’s FORMULA

4242

AN OPERATOR IN LAGOS REGION AN OPERATOR IN LAGOS REGION USING 5MHz OF SPECTRUMUSING 5MHz OF SPECTRUM

Using NCC’s formula, a WLL operator in the Using NCC’s formula, a WLL operator in the 800 MHz band with facilities in Lagos and a 800 MHz band with facilities in Lagos and a 5 MHz spectrum will pay a 5-year spectrum 5 MHz spectrum will pay a 5-year spectrum

fee as followsfee as follows::

FEES PAYABLE = [UNIT PRICE][BANDWIDTH][BAND FACTOR]FEES PAYABLE = [UNIT PRICE][BANDWIDTH][BAND FACTOR]

= [14 MILLION][5][1.4][1]= [14 MILLION][5][1.4][1]

= N98 MILLION= N98 MILLION

4343

EQUIVALENT SPECTRUM FEES EQUIVALENT SPECTRUM FEES BASED ON MOC FORMULABASED ON MOC FORMULA

4444

CASE 1:CASE 1:20,000 SUBSCRIBERS @ N5,000 20,000 SUBSCRIBERS @ N5,000

PER SUBSCRIBERPER SUBSCRIBER

Assuming a subscriber base of 20,000 in Lagos alone, at the Assuming a subscriber base of 20,000 in Lagos alone, at the rate of rate of N5,000 N5,000 per subscriber per annum. per subscriber per annum.

Fees payable in 5 yearsFees payable in 5 years == 20,000 x N5,000 x 520,000 x N5,000 x 5

== 20,000 x N25,00020,000 x N25,000== N500,000,000N500,000,000== N500million for Lagos N500million for Lagos

State State alone.alone. NCC’s Price (N98million) = NCC’s Price (N98million) = 19.6% of MOC’s price19.6% of MOC’s price

4545

CASE 2:CASE 2:20,000 SUBSCRIBERS @ N50,000 20,000 SUBSCRIBERS @ N50,000

PER SUBSCRIBERPER SUBSCRIBER

Assuming the same subscriber base of 20,000 in Lagos at Assuming the same subscriber base of 20,000 in Lagos at the rate of the rate of N50,000N50,000 per subscriber per annum which MOC per subscriber per annum which MOC charges some operators.charges some operators.

Fees payable in 5 years Fees payable in 5 years == 20,000 x N50,000 x 520,000 x N50,000 x 5

== N5Billion for Lagos N5Billion for Lagos State alone. State alone.

NCC’s price (98million) NCC’s price (98million) == 2% of MOC’s price2% of MOC’s price

The above figures show that NCC’s price is The above figures show that NCC’s price is very fair and competitive.very fair and competitive.

4646

NCC FEES AS PERCENTAGE NCC FEES AS PERCENTAGE OF OPERATOR REVENUEOF OPERATOR REVENUE

4747

CASE 1:CASE 1:20,000 SUBSCRIBERS @ 20,000 SUBSCRIBERS @ N1,500 FIXED CHARGEN1,500 FIXED CHARGE

Assuming a subscriber pays a fixed charge of N1,500 per Assuming a subscriber pays a fixed charge of N1,500 per month irrespective of usage.month irrespective of usage.

Operator fixed revenue per annumOperator fixed revenue per annum = 20,000 x N1,500 = 20,000 x N1,500

x 12 x 12

= N360million= N360million Operator’s fixed revenue in 5 years Operator’s fixed revenue in 5 years = N1.8Billion= N1.8Billion

NCC Spectrum fees (N98m) = 5.5% of operators Fixed NCC Spectrum fees (N98m) = 5.5% of operators Fixed

Revenue (not considering revenue from airtime charges)Revenue (not considering revenue from airtime charges)

4848

CASE II:CASE II:20,000 SUBSCRIBERS @ N1,000 FIXED 20,000 SUBSCRIBERS @ N1,000 FIXED

CHARGECHARGE

Assuming the same subscriber base but a fixed charge of Assuming the same subscriber base but a fixed charge of N1,000 per month per subscriber:N1,000 per month per subscriber:

Operator’s fixed revenue/annum = 20,000 x 1,000 Operator’s fixed revenue/annum = 20,000 x 1,000

x12x12 == N240,000,000N240,000,000

Revenue in five yearsRevenue in five years == N1.2 BillionN1.2 Billion NCC Spectrum fees (N98m) is 8% of Operators fixed revenue.NCC Spectrum fees (N98m) is 8% of Operators fixed revenue.

4949

RENEWAL FEES BASED ON MOC FORMULARENEWAL FEES BASED ON MOC FORMULA

S/NS/N OPERATOROPERATOR REGIONREGION No. of SubsNo. of SubsSpectrum fees @5,000 Per Sub Spectrum fees @5,000 Per Sub

Nm.Nm.SPECTRUM FEE @50,000 Per Sub SPECTRUM FEE @50,000 Per Sub

NmNm SUB TotalSUB Total

11 IntercellularIntercellular LAGLAG 30,00030,000 150150 15001500

"" OgunOgun 1,0001,000 55 5050

RiversRivers 4,5004,500 22.522.5 225225

AbujaAbuja 5,2005,200 2626 260260

NigerNiger 500500 2.52.5 2525

Total Total 205 205 20502050 206206

20602060

22 RelianceReliance LAGLAG 30,00030,000 150150 15001500

AbujaAbuja 10,00010,000 5050 500500

RiversRivers 10,00010,000 5050 500500

AnambraAnambra 10,00010,000 5050 500500

Total Total 300300 30003000 300300

30003000

33 BOURDEXBOURDEX SESE 80,00080,000 400400 40004000

Using Ave of 50% Using Ave of 50% of inst as of inst as

subscribedsubscribed 40,00040,000 200200 20002000

44 MULTILINKSMULTILINKS LagosLagos 40,00040,000 200200 20002000

55 StarcommsStarcomms LagosLagos 4,0004,000 2020 200200

66 EMISEMIS LagosLagos 4,0004,000 2020 200200

77 CELLCOMCELLCOM LagosLagos 6,0006,000 3030 300300

5050

END OF SHOWEND OF SHOWThank you for listening.Thank you for listening.

1 presentation on new spectrum fees and pricing strategy to nigerian telecommunications operators 11...

Documents