Over a decade separates Alheri Engineering’s failed ambition to become a telecom operator from Mafab Communications’ bold and unexpected feat of securing a provisional 5G licence barely a year after incorporation—beating even an established industry giant like Airtel.
Despite the time gap, both companies share striking similarities, and if history is any guide, Mafab’s owner, Musbahu Bashir, could learn valuable lessons from what led to the abrupt end of Alheri’s telecom dream.
Setting the Stage
On February 24, 2022, the Nigerian Communications Commission (NCC) was expected to receive a $273 million payment for a 5G spectrum licence from Mafab Communications and MTN Nigeria.
MTN, as the established player, was required to pay an additional $15.9 million to secure the preferred Lot One (3500-3600MHz), while Mafab was assigned Lot Two (3700-3800MHz) at no extra cost. Additionally, Mafab was required to obtain a Unified Access Service Licence (UASL)—the operational licence for the frequency spectrum—at an additional fee of ₦374.6 million (approximately $905,000).
MTN, already deeply rooted in Nigeria’s telecom landscape, had been actively securing funding in preparation for the licence and the technology rollout. Mafab, however, was a relative newcomer. Reports indicated that it was shopping for $350 million to cover the licence fee, as revealed by BusinessDay.
With just six weeks to secure funding and prove its legitimacy, Mafab faced intense scrutiny. Sources suggested that Mafab had backing from at least four credible and well-known investors. However, industry experts remained skeptical about whether its lack of experience could hinder its ability to convince investors and raise the required capital.
Beyond acquiring the licence, Mafab had to answer a crucial question: After securing the spectrum, what next?
A Look Back at the 3G Auction in 2007
In 2006, the NCC, following the success of the GSM auction in 2001, announced its plans to introduce third-generation (3G) technology to Nigeria. This upgrade promised faster data transfer speeds, improved voice quality, and enhanced mobile connectivity.
The commission granted pre-trial approvals to Huawei, Ericsson, and Alcatel to prepare for the commercial launch of 3G.
By February 2, 2007, the NCC officially began the licensing of 3G spectrum in the 2GHz and 450MHz bands through an auction process. The auction was open only to licensed network operators in Nigeria who met pre-qualification criteria.
The NCC set a reserve price of $150 million per 3G spectrum and required potential bidders to deposit $15 million (10% of the reserve price) as a prerequisite.
While 17 companies initially expressed interest, only four companies successfully submitted applications and emerged as winners:
1.MTN Nigeria
2.Celtel Nigeria (later Zain, now Airtel)
3.Globacom
4.Alheri Engineering
Alheri Engineering: A Telecom Newcomer Without GSM Infrastructure
At the time of the 3G auction, Alheri Engineering—owned by Africa’s richest man, Aliko Dangote—was not an established telecom operator. Founded in 1985, Alheri was primarily an engineering and infrastructure firm before attempting to enter Nigeria’s telecom sector.
Unlike its competitors—MTN, Celtel, and Globacom—Alheri lacked a GSM licence and had no existing subscriber base.
Industry experts warned that deploying a 3G network without an existing 2G infrastructure was nearly impossible. Alheri, however, proceeded with its bid and paid the $150 million licence fee, banking on the expectation that it could later acquire a GSM licence from the NCC.
This proved to be a costly miscalculation.
Why Alheri’s Telecom Dream Collapsed
Alheri’s telecom ambitions were quickly derailed by two major challenges:
1.Lack of 2G Infrastructure: Unlike its competitors, which had invested heavily in 2G infrastructure, Alheri had to build everything from scratch. This significantly increased costs and delayed its ability to roll out services.
2.Failure to Acquire a GSM Licence: The NCC did not offer Alheri a GSM licence, leaving it stranded with a 3G spectrum but no way to deploy it effectively.
Faced with these obstacles, Alheri was left with no choice but to sell its 3G licence to Etisalat for $250 million, making a $100 million profit but ultimately exiting the telecom industry before ever launching services.
What This Means for Mafab Communications
Mafab finds itself in a strikingly similar situation to Alheri.
Like Alheri, Mafab entered the telecom sector without an existing subscriber base and has now acquired a premium spectrum licence. The key question remains: Can Mafab avoid Alheri’s fate?
Challenges Facing Mafab’s 5G Rollout
A 2022 report by Advocaat, a legal services company, outlined several major hurdles Mafab will face:
1.High Cost of 5G Devices
•The availability and affordability of 5G-compatible devices remain a major issue.
•As with 4G, adoption will likely be slow, with only high-income users in major cities able to afford 5G-enabled devices.
2.Fibre Optic Infrastructure Deficit
•Nigeria requires 120,000km of fibre optic cable for full broadband penetration.
•The country currently has an 80,000km deficit, making nationwide deployment of 5G extremely difficult.
3.Foreign Exchange Volatility
•Telecom operators rely heavily on imported equipment and foreign technical expertise.
•The fluctuating naira and forex scarcity could significantly drive up costs.
4.Unstable Power Supply
•5G technology requires a dense network of base stations, which demand significantly more power than existing 3G and 4G networks.
•Nigeria’s unstable electricity grid and high cost of alternative energy sources (diesel, solar, batteries) could affect service quality and increase consumer costs.
What Can Mafab Do to Succeed?
Industry experts believe Mafab’s best shot at success is through mergers and acquisitions (M&A)—similar to what Alheri attempted with NITEL.
However, with no distressed telecom operators like NITEL left to acquire, Mafab would need to spend at least $1 billion to acquire an existing telco.
Another concern is Mafab’s $1.9 billion funding target. Failure to raise this capital could see it follow in Etisalat’s footsteps, where heavy debt led to a forced exit from Nigeria in 2017.
Worst-Case Scenario: Mafab Sells Its Licence Like Alheri
If all else fails, Mafab may flip its 5G licence for a higher price, just as Alheri did with its 3G licence in 2008.
Given the rapid growth of Nigeria’s telecom industry and the increasing demand for high-speed internet, Mafab’s 5G licence could fetch a significant premium—possibly well over the $273 million it paid.
Final Thoughts
While securing the 5G licence was a major win for Mafab Communications, the real challenge lies ahead.
Without an existing subscriber base, fibre backbone, or nationwide infrastructure, Mafab faces an uphill battle to compete with industry giants like MTN, Airtel, and Globacom.
The big question is: Will Mafab prove the skeptics wrong and successfully roll out 5G, or will it follow Alheri’s path and exit before ever launching?
Time will tell.
