MTN South Africa has filed a lawsuit against the country’s telecom regulator, the Independent Communication Authority of South Africa (Icasa), over the upcoming 5G spectrum auction, thus becoming the second company, after Telkom, to do so.
The Icasa’s spectrum auction plan classified MTN and Vodacom as tier-1 operators, which limits their chances of participating in the auction to zero.
The bone of contention is the 3.5GHz radio frequency spectrum band, which Icasa intends to make available to smaller telcos in South Africa, excluding MTN and Vodacom. The band is key to the delivery of 5G broadband services, but with the tier-1 classification, MTN and Vodacom can only bid for 4G spectrum auction.
MTN filed the suit on Wednesday in Pretoria, asking the court to declare Icasa’s process for awarding the 3.5GHz spectrum “unlawful” and have it “reviewed”, “corrected” or “set aside.”
The regulator had decided to implement an auction structure that creates two tiers of mobile operator. MTN and Vodacom are in tier 1 while Telkom, Liquid Telecom, Cell C, Rain, are in tier 2.
Icasa plans an opt-in auction round in which tier-1 operators will be barred from participating while those in tier-2 will be eligible to bid for 5G spectrum.
If the plan goes, MTN will lose out of 5G roll out in South Africa where it has invested so much in the fifth generation network infrastructure. The telco has rolled out 5G network across 100 towers, using the temporary spectrum government assigned it. But it needs more spectrum to attain further coverage.
MTN now wants clarity on the tiering classifications and the opt-in round structure through court. It said it has exhausted all other options for clarification as the regulator was not forthcoming with explanation.
The company said in its suit challenging the definitions used by the regulator to differentiate tier-1 and tier-2 operators, that they are “vague, arbitrary and unreasonable.”
Telkom already has access to the 3.5GHz band, 28MHz of it, according to Tech Central. Now MTN is worried that its rival could use the opt-in phase to secure the available spectrum, leaving it on 4G.
Icasa’s decision to place MTN and Vodacom on tier-1 is seen as a move to clip their chances to dominate the 5G roll out. The South African government owns 40% majority stake in Telkom, which is the third largest telco in the country, behind MTN and Vodacom.
MTN and Vodacom have more financial muscle to outbid the rest of the telcos in the spectrum auction, a situation the South African government appears keen to avoid since it will cripple Telkom’s chances in the 5G play field. There is limited 5G spectrum, and between the telcos, only MTN and Vodacom stand in the way of Telkom who is trailing them with 12 million subscribers, not up to half the 30 million subscribers in MTN customer-base.
Liquid Telecom is the only other telco among them with 56MHz access to the 3.5GHz band. The company is already building a wholesale 5G network, with Vodacom paying it for 5G roaming services for clients, according to Tech Central.
However, MTN said it does not want the lawsuit to delay the auction which is expected to take place in March, although there is a pending suit by Telkom seeking urgent temporary relief to stop the auction.
Telkom Group Executive for regulatory affairs and government relations, Siyabonga Mahlangu told Tech Central it’s suing Icasa because it felt the invitation to apply (ITAs) for spectrum and a planned wholesale open-access network contained fundamental flaws that could entrench the dominance of Vodacom and MTN.
The importance of technology to modern day commercial activities is indispensable and has occupied a pervasive role not only in commercial transactions but all other spheres of human activities. Indeed so numerous are its forms and the chief among is Financial Technology popularly called Fintech. Innovations brought by technology have brought tremendous and radical changes to the traditional way of conducting commercial activities. Virtually all sectors of the economy of the countries in the world have been disrupted by the innovation brought by technology. Trading and provision of services have now been made easier as physical contact is no longer needed before commercial transactions can take place.
Capital market, a financial market for trading securities of companies, is not left out of this tremendous changes brought about by the technology, as many online platforms now available for buying and selling of company securities quoted on the Nigerian Stock Exchange. Hence, this article tends to bring out the impact of financial technology in the Nigerian Capital market and the needs for effective legal and regulatory framework.
DEMYSTIFICATION OF SOME CERTAIN TERMS
Before delving into the heart of this discussion, it is pertinent to demystify some certain terms like Financial Technology and Capital market for proper and easy understanding.
Financial Technology: Fintech, as it is mostly called and the name implies refers to that technology used in delivering financial services as opposed to the traditional banking method of delivering financial services. According to investopedia, Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. It has also been referred to as the synergy between finance and technology, which is used to enhance business operations and delivery of financial services. Examples of Fintech are Paystack, Paypal, Flutterwave, E-transact, Remittal, etc
Capital Market: Investment and Securities Act, 2007, the chief legislation on Capital Market, makes no provision for definition of capital market. But it has been defined as the financial market where trading of companies’ securities takes place. It has also been described as a financial market for long term financial assets such as government bonds, corporate bonds and equity and unlike money market which functions to provide short term funds : rather, it is a network of financial institutions that in various ways bring together suppliers and users of capital, facilitating the issuance of secondary and long term financial instruments
It is a market where investors and companies engage in trade of financial securities like bonds, stocks, etc
It is a market for buying and selling of shares and other financial securities. The Capital market is divided into primary markets where newly issued stocks are sold to the investors through a process called underwriting and secondary market for financial instruments that already exist.
Companies quoted on Nigerian Stock Exchange raise funds to cater for their financial needs
THE IMPACT OF FINANCIAL TECHNOLOGIES ON THE NIGERIAN CAPITAL MARKET
The elementary but chief function of FinTech is facilitating automated financial services delivery to the consumers. However, Fintech has now expanded beyond this role as many online platforms now exist for savings, crowdfunding, buying and selling of company’s securities, thereby making investment a lot easier for investors and companies to raise capital for their financial needs.
Security and Exchange Commission, the chief regulator of the Nigerian Capital market in its attempt to provide a regulatory framework for operation of Fintech firms and startups in the country launched a FinTech Roadmap Committee at the Q3 meeting of its Capital Market Committee in 2018. This shows that the SEC has come to the reality and impact of Fintech to the Nigerian Capital Market. The Committee came up with a report titled the “Future of FinTech in Nigeria”. It was formerly by the SEC on the 29th October 2019 at the Nigerian Fintech week.
Financial Technology now provides a platform where not only the investment in securities of companies take place but also commodities exchanges where tangible goods like agricultural products are traded. Examples of such platforms are Weath.ng, Chaka, Bamboo, etc. In others words, these platforms can be called online securities and commodity platforms. Also, the Nigerian Stock Exchange has adopted an automated trading system for securities trading on its floor.
It has increased participation of people investing in the securities of both local and foreign companies, thereby making it easier for both the investors and the companies to interact without physical contact.
Convenience: as reported by Mckinsey & Company on their website customer adoption of fintech is primarily driven by access and convenience. This in turn, reduces the time and stress in going through the traditional way of investing in securities of a company. Toeing this pathway, this has increased participation of low and middle income earners in the Nigerian Capital Market. It has promoted and still promotes easy access to the Nigerian Capital Market.
Accountability and Transparency are one of the driving forces of any financial investment as Fintech tends to portray these traits in their provision of financial services to the both the key players in the Nigerian Capital Market, even at a reduced level of documentation. Payment of taxes and other charges are done automated thereby promoting accountability and transparency. One can actually conclude here on this, that there has been a tremendous increase in government as there is no need for cash to exchange hands.
Integration and facilitation of payment for shares bought by investors is another chief role Fintechs play, as payment cannot be made possible without their services. This is made possible through card payment whether debit or credit, payment with account or bank transfer without visiting the traditional Banking institutions.
Finally, FinTech is invaluable to the development of the Nigerian Capital Market and its overwhelming role cannot be overlooked, hence the need for a proactive and effective legal and regulatory framework.
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THE NEEDS FOR EFFECTIVE LEGAL AND REGULATORY FRAMEWORK FOR FINTECHS IN THE NIGERIAN CAPITAL MARKET.
Provision of clarity and effectiveness of legal and regulatory framework of any legal system works magic. This cannot be over emphasized as this we result in the development of that country especially its economy. Lack of effective legal and regulatory framework on fintechs providing online securities and commodities exchanges trading has stifled the innovations and creativity of the fintech firms thereby limit their participation in the Nigerian Capital Market. This can be seen in the recent case between Chaka, an online platform for trading of securities and SEC, whereby the latter secured an interim order from the Investments and Securities Tribunal restraining the former and its promoters from advertising or offering for sales securities. This has led to the confusion on whether fintech firms dealing with securities as a stock broker or not.
It has been aptly argued that existing capital market regulations are inadequate in providing clarity as to the status and compliance requirements of Fintech companies.
As society keeps changing, legal frameworks must also be in motion in order to meet up the dynamic nature of the society. Our laws and regulations must keep to time and not remain static. This can be achieved by having proactive regulatory bodies saddled with the responsibility of making regulations for the Market through their enabling laws. The Capital Market of every country plays crucial roles in their economies, hence the needs for innovations.
Effectiveness and Clarity of legal and regulatory framework for FinTech in the Nigerian Capital Market would pave a pathway for development of the market which would enhance and equip it to compete globally.
CONCLUSION
In conclusion, Fintechs have come to stay and play a crucial role in the Nigerian Capital Market. The needs for an effective legal and regulatory framework cannot be faulted as this would lead to more innovations being brought by the fintechs to the development of the market.
References.
See http//: corporatefinancialinstitute.com
See the paper titled “An Introduction to the Capital Market”, delivered at a seminar in Abuja on 12th October 2000 by Dr (Mrs) Ndi Okereke Onyiuke, DG and the CEO of the Nigerian Stock Exchange. Quoted at pp 361 of Com pany Law and Practice in Nigeria by Hon. Dr J Olakunle Orojo.
Tayo F. ‘SEC VS Chaka: Key Lessons for Regulators and Securities FinTech Companies’ https://www.busnessday /opinion/article/sec–v- chaka-keylessons-for-regulators-and-securities-companies/amp/ .
With the less than a few hours to the end of the first month in 2021, our analysis has shown that Nigeria attained more than 6.3 million Internet search volume in 30 days, generated from 331 searches. This was gleaned from the data mined and analysed by our analyst. According to the Google Trends, the primary source of the data, activities of Nigerians and those reside in the country on the Internet using Google Search Engine led to the volume search. More than 19,250 volume of search was found as average per day during the period. Over 5,000 volume of search was recorded the most.
Analysis shows that sports and, life and style were the specific information Nigerians and other nationals consumed the most. Out of the 331 searches, according to our analysis, sports information category had 59.81%. These outcomes similar to what our analyst had previously found for the Internet activities of January 4 and January 8, 2021.
Exhibit 1: Frequency of Searching Sports Related Information per day
Source: Google Trends, 2021; Infoprations Analysis, 2021
Exhibit 2: Search Volume in 30 Days of January, 2021
Source: Google Trends, 2021; Infoprations Analysis, 2021
The implications of these results are not different from what our analyst had noted in the previous analysis that people searched and read what appealed to them during the period of analysis based on their needs. For instance, within sports category, people searched and read foreign football matches and players than local ones. Foreign musicians and artistes occupied people’s mind when they sought information or read the news within the life and style category.
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Good People, I am very happy to announce that Tekedia Hub is ready. This ecosystem is developed to ensure that innovators in our community can advance their missions. WhatsApp could not serve us due to our scale. Now, we have our own “Facebook for Innovators” and members can do great things. It is an open ecosystem for everyone. Feel free to go and create an account, and connect with others.
Hopefully, when we begin Tekedia Mini-MBA on Feb 8, we will see people discussing business strategies, frameworks, forming private groups, hashtagging on topics, and co-learning to accelerate leadership ascents. Our goal is simple: help innovators and growth champions to advance companies and institutions.
Tekedia Hub is an ecosystem developed for innovators and growth champions, to co-learn and co-share, on the mechanics of business systems and innovation. It has capabilities to enable members to form groups, follow others and be followed, and discuss important things, around business, education and more. As we developed it, we used this phrase – “Facebook for Innovators”.
How to Join and Suggestions to Follow:
Go tohub.tekedia.com and create a FREE account. The system will email you and ask you to activate. Once done, you are ready for the Hub.
Now, tell your friends, colleagues and associates to join. You can create a group and topics. If you run a mentoring growth, you can create one and ask the mentees to join in a group.
Our focus here is innovation and business across all industrial sectors and territories.
The Android app version arrives later in the week once Google approves it.
This Hub (web and mobile app) replaces WhatsApp in Tekedia Mini-MBA and becomes the platform to communicate with members.
Verification of Profile
Good People, good morning. Though we have put some requirements to add the “Verified sign” on profile, all you need to do is simple: capture a screenshot of your LinkedIn profile with the URL, and also capture another webpage with your photo/name [company website, newspaper, press release, etc). Once you have them, click the Verification request; Tekedia runs 24/7 and my team will evaluate and verify. Then the Verified sign will show.
