Cote d’Ivoire: Warid Telecom pays for licence but can’t get enough spectrum to operate

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You would think that it would be fairly simple for a mobile operator to buy a licence and be assured that the necessary spectrum would be made available. But matters are not always this straightforward as one of Africa’s newest mobile operators Warid has discovered in Cote d’Ivoire. Russell Southwood seeks to understand the unfolding muddle.

Warid Telecom opened its first operation in Uganda and has big expansion plans for Africa. Backed by the Abu Dhabi Group, it wants to roll out mobile voice and data operations. Things seemed to start well in Cote d’Ivoire. On 4 July 2006 it signed an accord with the Ivorian Government to become the country’s 6th licensed operator. It agreed to pay FCFA30 billion for a licence giving it bi-band frequency in the 900-1800 frequency and an international gateway licence.

According to this licence agreement, 95% of the sum was to be paid to the Government and 5% to the regulator ATCI. FCFA300,298,789,474 of this was paid immediately as a down-payment and the rest was due for payment in June 2009 when its 10 year licence began, the date also given for launching services.

However, Warid needed additional spectrum for its operations so it sought to enter into an agreement with local company Celcom Cote d’Ivoire which since 2005 had had a provisional licence to operate with the overall aim of obtaining the additional spectrum it required. These negotiations were with its Administrative D-G and shareholder Séry Cyriaque who died in a plane crash in Cameroon in May 2007. The D-G of the National Lottery and President of the company’s Conseil d’administration Enerst Dally Zabo took over the negotiations.

The hiccup is that it wanted to put money into Celcom on the basis that it would get the additional spectrum it wanted but Celcom did not have enough of the required spectrum. Clearly getting desperate one year later, Warid Telecom found itself listening to Eugène Diomandé who said that for a commission he would be able to find Warid its additional spectrum. But again as yet without results…

Faced with this impasse, the D-G of the regulator ATCI, Sylvanus Kla has issued a statement seeking to clarify matters:”The owners (Warid) have indicated that the additional spectrum that it benefited from (through its partnership with) Celcom (is not enough) and it needs additional channels. I have told them that there are no additional channels free. They proposed to buy spectrum from existing operators and I accepted that on the basis that a “secondary market in frequencies” is an effective means of facilitating the optimal use of spectrum and is not against Ivorian regulations.” He also clarified that Warid had contacted Eugène Diomandé:”…to help them as an intermediary on a purely private basis.”

He added that the licence fee was fixed by the Ministry of Finance after the allocation of 16 additional channels. He also said the sum was for the licence but not the allocation of spectrum. A “juriste d’affaires” interviewed by local paper Soir Info described this explanation as “astounding and grotesque”.

Whatever the rights and wrongs of case, Warid is stuck with the problem of finding additional spectrum to operate and having to go “cap-in-hand” to existing and potential operators to beg spectrum in exchange for money. This might all be a storm in an Ivorian teacup were it not that this is not the first time we’ve heard of this happening, Globacom in Benin found itself with a licence but without adequate spectrum to operate fully.

The regulator’s solution? It wanted the operators to give up spectrum and allow the shifting of channel allocation. The flaw in the plan was that the incumbent’s base stations were so old that it was not able to perform the required spectrum shuffle.

Again whatever the rights and wrongs of these individual cases, there has to be a better way to organise the allocation of spectrum and those that allocate licences perhaps need to take some responsibility for this part of the process: either by insisting that companies do not “sit” on spectrum allocations by reclaiming them if unused after a reasonable period of time or genuinely offering to create a “spectrum market” that operates transparently without the need for local intermediaries.