Telkom Spectrum Billing Reaches Balance – Icasa

South Africa’s Independent Communications Authority (Icasa) said its out-of-court settlement with Telkom showed that there must be attempts to balance commercial interests with the public good.

Ikasa and Telkom said Sunday Times that the deal was a win for the sector.

The newspaper also quoted Telkom’s head of regulation and government relations, Siyabongu Mahlanga, as saying that there was a lot of trust and goodwill by the end of the protracted battle.

This comes after the couple announced last Friday that they came to an agreement – a few days before the Telkom v. Icasa hearing.

The fight was over precious radio spectrum—the raw network bandwidth that carriers use to communicate between cell towers and mobile devices.

South African mobile network operators have been begging Icasa for years for more spectrum, promising that it will improve network quality and lower prices.

Initially, Icasa hoped to sell the coveted spectrum by last March.

However, a lawsuit by Telkom and E-tv prevented this.

In September 2021 Ikasa agreed to order postpone the auction. He hoped to clear the way for the auction to take place by January.

Icasa announced its new spectrum auction plan in December, and the auction is scheduled for March 2022.

Telkom was unimpressed, saying that Icasa made several of the same mistakes as last time and reopened the lawsuit.

His objections to the Icasa auction were numerous, including that the regulator did not properly consider how the auction would affect South Africa’s competitive environment.

Telkom also complained that the spectrum it needed was not available because TV people still used it.

A critical issue with the new Icasa auction rules was that they placed an upper limit on how much spectrum each mobile network in South Africa was allowed to own.

In essence, Icasa has counted all the spectrum currently allocated and added all the frequencies it planned to put up for auction.

He divided this by the number of operators who rushed into the ring for a chance at more spectrum – Vodacom, MTN, Telkom, Cell C, Rain and Liquid.

Spectrum of major mobile networks in South Africa ahead of auction – from Telkom Icasa presentation

Telkom disagreed with how this maximum was calculated, stating that it had incorrectly accounted for the full range of spectrum that Rain owns.

This is because Telkom went to auction with more spectrum than Vodacom and MTN combined.

South Africa’s two largest operators could buy over 100 MHz of spectrum each, while Telkom was limited to much less.

Telkom considered this unfair as it did not have the lower frequency spectrum below 1 gigahertz (GHz) while Vodacom, MTN and Cell C did.

Vodacom ended up buying 110 MHz for R5.3 billion and MTN buying 100 MHz for R5.1 billion.

Telkom offered R2.1 billion for 42 MHz of spectrum, of which 20 MHz was sub-1 GHz.

Spectrum below 1 GHz is attractive because it can provide more coverage per cell than higher frequencies and allows for better signal penetration through walls.

Total number of spectrum lots purchased by each bidder and related financial commitments
Bidder 700 800 2600 3500 TOTAL (ZAR)
Telcom twenty 22 R2,113,615,407.10
Liquid Telecom four R111,000,000.00
Cell C ten R288,200,000.00
Rain twenty twenty R1,431,374,105.50
MTS twenty 40 40 R5,152,100,000.00
Vodak twenty 80 ten R5,381,600,000.00
Unsold twenty
Total income received R14,477,889,512.60

Telkom’s settlement agreement with Icasa is aimed at satisfying its dissatisfaction with spectrum restrictions.

Icasa has committed to start licensing the spectrum remaining unallocated in the auction no later than June 30, 2022.

The regulator must conclude this within the current financial year.

By the end of the auction, one lot of spectrum below 1 GHz had not been sold.

Icasa has also committed to review the results of the auction to license this unallocated spectrum in the 800 MHz band.

In addition, the regulator agreed to investigate the impact of the potential secondary spectrum market on competition and, if necessary, provide an adequate and favorable regulatory framework.

Now read: E-tv takes South Africa hostage over frequency band