Mafab 5G Spectrum Transfer to MTN Nigeria: What We Know

Mafab Communications is seeking regulatory approval to transfer key 5G spectrum assets to MTN Nigeria, potentially changing the structure of Nigeria’s 5G market.

The proposed transaction covers Mafab’s 2×20 MHz holding in the 2.1 GHz band and 100 MHz in the 3.5 GHz band, according to reports citing industry sources. The Nigerian Communications Commission (NCC) would need to approve the transfer before it could be completed.

Neither MTN Nigeria nor the NCC had publicly confirmed the proposed transaction in the reports available on Friday, September 18. THISDAY and PUNCH said enquiries had been sent to the parties without confirmation by publication time.

How Mafab acquired its 5G spectrum

Mafab became one of the two winners of Nigeria’s first 3.5 GHz 5G spectrum auction in December 2021, alongside MTN Nigeria.

The NCC records show that both companies paid $273.6 million for their respective 100 MHz spectrum lots. MTN also paid an additional $15.9 million at the assignment stage for the 3500-3600 MHz block, while Mafab received the 3700-3800 MHz block without an additional payment at that stage.

The auction was part of Nigeria’s plan to expand broadband capacity and support the deployment of fifth-generation mobile services.

The NCC subsequently issued final 5G spectrum licence award letters to MTN and Mafab in 2022.

What Mafab is proposing

The current proposal would transfer Mafab’s identified spectrum holdings to MTN.

The transaction is not the same as saying MTN would simply recover Mafab’s original $273.6 million investment. Reports say the financial terms of the proposed transaction have not been disclosed.

The proposed transfer would therefore need to be assessed on its own terms by the regulator.

The NCC’s role is particularly important because radio-frequency spectrum is a regulated national resource. Any change in spectrum assignment has implications beyond the two companies involved.

Why the spectrum matters to MTN

For MTN Nigeria, the additional spectrum could provide more capacity for its mobile network as data consumption continues to grow.

Spectrum is the radio-frequency resource mobile operators use to connect phones and other devices to their networks. Additional usable spectrum can give an operator more capacity to handle traffic, although the practical benefits also depend on network infrastructure, equipment, geographic deployment and demand.

MTN launched commercial 5G services in Nigeria in September 2022. Mafab announced its own 5G launch in January 2023 after receiving an extension to its deployment timeline.

The proposed transfer could therefore give MTN access to additional frequencies without having to acquire new spectrum through a fresh auction.

What it could mean for competition

The possible transaction also raises questions about competition in Nigeria’s telecommunications market.

Mafab originally entered the 5G market as a new operator alongside MTN after the 2021 auction. If its spectrum moves to MTN, one of the operators that emerged from that auction as a separate 5G competitor would no longer hold the same spectrum position.

PUNCH reported that industry participants were already discussing the balance between giving an established operator additional network capacity and preventing excessive concentration of spectrum resources.

The effect on competition cannot be determined from the proposed transaction alone. It would depend on the NCC’s assessment, the final terms, how the spectrum is deployed and the competitive position of other operators.

Airtel Nigeria is also a 5G operator. It obtained its 5G spectrum licence separately after the original MTN-Mafab auction.

Why the regulator’s decision matters

The NCC will have to consider the proposed spectrum transfer within Nigeria’s telecommunications regulatory framework.

The commission’s original 3.5 GHz auction was designed to allocate spectrum for 5G deployment and expand broadband services. Its information memorandum described spectrum licensing through an auction as a means of assigning the resource in a transparent and efficient manner.

A transfer several years after the original auction therefore creates a different regulatory question from the initial allocation.

The NCC would need to examine the proposed assignment, the terms of the transaction and its implications for spectrum use and the wider telecommunications market.

What happens to Mafab’s 5G ambitions?

Mafab’s proposed transfer would represent a significant change from the company’s original position as one of the new operators selected to participate in Nigeria’s 5G rollout.

Reports differ in how they describe Mafab’s subsequent network performance and operations, so claims about the extent of its commercial activity should be treated carefully.

What is established is that Mafab was one of the original winners of the 3.5 GHz auction and that its spectrum is now reportedly being considered for transfer to MTN.

The final regulatory decision will determine whether the proposed transfer proceeds.

What Nigerian consumers should watch

For consumers, the immediate issue is not a change to their SIM cards or 5G phones. The proposed transaction is primarily about spectrum ownership and assignment.

If approved and subsequently deployed, additional spectrum could give MTN more resources for network capacity. Whether that translates into faster or more reliable service would depend on how the frequencies are integrated into the company’s network.

The competitive consequences are less straightforward. A transfer could alter how spectrum is distributed among operators, making the NCC’s regulatory assessment an important part of the process.

For now, the transaction remains proposed and subject to regulatory approval. The price MTN may pay, the final structure of the deal and the NCC’s decision have not been publicly established in the sources reviewed.

The next significant development will be whether MTN, Mafab or the NCC formally confirms the transaction and publishes details of the proposed spectrum transfer.