Key highlight
- MTN Nigeria paid N281 billion and $590.5 million for the acquisition and renewal of spectrum licenses in Nigeria in the last 21 years, excluding annual levies and taxes.
- The company acquired licenses for different frequencies, including 3G, 4G/LTE, and 5G, and paid some of the fees in US dollars.
- Telecom companies like MTN Nigeria have contributed significantly to the Nigerian government’s revenue, generating billions of naira from spectrum fees and license auctions.
Technology company, MTN Nigeria, has paid a total of N281 billion and $590.5 million to the Nigerian government in the last 21 years of its operation in the country.
This amount, which is exclusive of annual operating levies and taxes to the government, was paid for the acquisition and renewal of its spectrum licences over the years.
A breakdown of the payments as reported in the company’s 2022 audited financial report shows that MTN which was one of the first two telecoms to acquire a GSM licence in Nigeria in 2001 paid N20.72 billion for its digital mobile licence (DML) in February 2001. The 10-year tenure licence was renewed in September 2021 for N71.61 billion.
Also in September 2001, the company acquired its Unified Access Service Licence (UASL) for N114.6 million. The technology-neutral licence, which allows the telco to offer a full bouquet of services possible on the existing spectrum was also renewed in September 2021 for N374.6 million.
In January 2021, MTN acquired the 800MHz spectrum licence of Intercellular for 4G/LTE, which also enables voice calls over IP-based networks, video calling, streaming and downloading etc. The company said it paid N16.12 billion for the licence.
The company also acquired another licence in the 2.6GHz band in 2018 to boost its broadband service capacity. While other telecom operators shunned the auction of the licence by the Nigerian Communications Commission (NCC) because according to them, the price was too high, only MTN indicated interest and paid N18.9 billion.
The company is expected to renew the 10-year tenure licence in the next 5 years.
The company said it also paid N34.1 billion for the acquisition of a 700 MHz spectrum licence in January 2018.
In addition, MTN last year paid the highest amount for a single licence with its acquisition of the 3.5GHz spectrum in the 3500-3600MHz frequency for 5G service. The company which was the first to roll out commercial 5G in Nigeria said it paid N119.28 billion for the licence.
Dolla denominated payments
While most licences auctioned by the NCC are often quoted in dollars for the sake of international investors that may wish to participate, local operators are allowed to pay in naira equivalent. However, MTN’s financial report indicated that some were paid for in dollars.
According to the company, $150 million was paid to the government for its 3G spectrum licence in May 2007. MTN said the 15-year tenure licence which has been due for renewal since last year is yet to be renewed because the NCC is still in the is in the process of finalizing the review frequency spectrum regulations, which is to be used for the assessment of the fees.
The company also paid $220 .5 million in 2010 for an International Submarine Cable licence, which allows it to set up and maintain a landing station for its West Africa Cable System (WACS). In addition, MTN 2015 acquired another spectrum licence in the 800MHz band for $220 million.
Positive yields
Meanwhile, MTN’s huge investments in spectrum licences in Nigeria are also yielding positive results for the company with steady growth in profits. In the last 5 years, for instance, MTN has maintained steady growth in its bottom line as Nigerians spend more on data and voice calls.
In 2018, MTN’s profit after tax jumped to N145.6 billion from the N81.07 billion it recorded in 2017, which was about an 80% increase. Similarly, in 2019, the company recorded a 38.73% increase in profit to N202.1 billion.
The year 2020 saw MTN’s profit after tax rose to N205 billion, while in 2021, its bottom line grew by 45.5% to N298.7 billion.
The latest financial statement of the company shows that MTN in 2022 crossed N2 trillion in revenue, the first by any company in Nigeria. Its profit after tax for the year also jumped by 21% to N361.5 billion.
Telecom boosting government’s revenue
Aside from the increasing contributions of the industry to the country’s Gross Domestic Product (GDP), telecommunications has been a vibrant source of revenue for the Nigerian government.
At the end of 2020, for instance, the NCC announced that it had remitted the sum of N344.71 billion to Federal Government Consolidated Revenue Fund (CRF) from spectrum fees.
While presenting the scorecard of the Buhari administration early this year, the Minister of Communications and Digital Economy, Isa Pantami, declared that the government had realised the sum of $820.8 million from the 5G licence auction alone.
He added that additional revenue is being generated from other fees being paid by the telecom operators.
Recall that aside from MTN, Mafab Communications also paid the naira equivalent of $273.6 million for a 5G licence last year. In January this year, Airtel also announced that it had paid the sum of $316.7 million for 100 MHz of spectrum in the 3500MHz band for the deployment of 5G and 2x5MHz of 2600MHz to boost its 4G coverage in the country.
