R2.65bn raised in first round of SA's radio frequency spectrum auction

The telecoms regulator has raised R2.65bn in the first round of the radio frequency spectrum auction.

The Independent Communications Authority of SA (Icasa) said on Tuesday that Rain and Telkom emerged as winners, beating Cell C — while Liquid Intelligence did not submit its bid. Rain and Telkom were allocated spectrum in the 700MHz, 800MHz and 2600MHz bands.

This is the first time Icasa is auctioning the much-needed spectrum, which has been delayed for more than a decade due to court cases and also policy and regulatory changes.

Spectrum is a finite resource that is key to accelerate the rollout of superfast technologies and bridge the digital divide by offering similar quality of services to rural areas.

According to Icasa: “Operators have been spectrum constrained for a long time and the Authority has complete faith in this licensing process in that this much-needed stimulus output will translate into greater investment in broadband infrastructure and economic growth for the country.”

Icasa chair, Dr Keabetswe Modimoeng, said the licensing of this spectrum through auction “has major economic and social benefits for our country, especially when the economy is emerging from the ravages of the Covid-19 pandemic”.

“This process provides a critical stimulus for economic recovery and has the potential to stimulate employment by leveraging on ICT networks and digital platforms to deliver economic value for the South African society,” said Modimoeng.

Icasa added that the licensing process would enhance competition in the mobile services sector, increase broadband connectivity and coverage, and bridge the digital divide between urban and rural access to mobile broadband networks.

The second round of the auction will be on Thursday, with all six bidders: Vodacom, MTN, Telkom, Cell C, Rain and Liquid Intelligence.

Icasa has pressed ahead with the auction despite a court action from Telkom, which is unhappy with the process.

In January, Telkom filed an application to interdict the process. It later withdrew the interdict but said it is continuing with another part of its court case that deals with how the spectrum auction process is structured and its impact on competition.

In its answering affidavit in response to Icasa, the minister of communications and digital technologies, Rain, Vodacom and MTN — who are all opposing the court application — Telkom reiterated its concerns that the process would further entrench the big operators.

It explains that, taking the current structure and state of competition market as the starting point, if Vodacom and MTN successfully bid for more than double what Telkom can get at auction and can continue to access significant additional spectrum through the spectrum arrangements with other operators, Telkom’s “ability to be one of the serious challengers to the entrenched duopoly will be severely constrained”.

For an appropriate relief, Telkom said a structural or supervisory interdict is justified in the circumstances of this case because, since 2010, Icasa has, according to Telkom, proven it is unwilling to conduct the licensing of the spectrum lawfully.

“A structural or supervisory order would not be intrusive because it would merely direct Icasa to comply with its positive obligations, which are clearly stipulated in the applicable regulatory framework,” Telkom said.

The matter is expected to be heard in court next month.

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