TELECOM firms MTN, Vodacom, Telkom and Rain are likely to win spectrum in the March radio frequency spectrum auction, and two other companies, Cell C and Liquid Telecoms, might lease out spectrum if they were successful in the auction, analysts speculated yesterday.
South Africa’s telecoms regulator Independent Communications Authority of South Africa (Icasa) said yesterday that all six applications it had received from telecoms firms had qualified to participate in a radio frequency spectrum auction, a process slowed by years of legislative delay.
Icasa said the qualifying bidders were MTN, Vodacom, Telkom, Cell C, Rain Networks and Liquid Telecoms.
Peter Takaendesa, an investment analyst at Mergence Investment Managers, said yesterday in a telephone interview that the auction was a significant event in South Africa’s telecoms sector, as the country was behind its peers, including behind some African countries, in the release of this spectrum for mobile operators.
Licensing the spectrum is also a key component of President Cyril Ramaphosa’s efforts to get the economy on to a stronger footing.
Keabetswe Modimoeng, the chairperson of Icasa, said, “We can officially proclaim the forthcoming March 2022 spectrum auction as an unparalleled milestone in our country’s communications history as this will be the first ever spectrum auction held on our shores.”
Operators have waited for years for Icasa to release spectrum licences that are needed to lower data costs, roll out 5G and add network capacity as data demand has surged and smartphone adoption continues to grow.
But the spectrum auction has been stalled by legal challenges. Telkom will, for instance, meet Icasa in court in mid-April, this after withdrawing earlier plans to interdict the regulator so that the auction can go ahead, after Telkom took issue with the regulator about issues in the auction including the sub-1GHz spectrum.
Takaendesa said the auction of spectrum to mobile operators should, theoretically and practically, lead to lower data costs as, for example, the lower frequency spectrum could cover a bigger area, and was thus suitable for rural areas, and it would require the operator to build fewer towers to cover those areas. Ultimately though, the effect on data prices would also be a function of the competition between the operators.
World Wide Worx chief executive Arthur Goldstuck said the mobile operators would benefit from being able to accommodate a higher number of users from the new spectrum, and while the higher frequency spectrum might only require additional antennas on some cellphone towers, additional towers might need to be built in areas where there were many users of the high frequency spectrum, such as businesses.
Goldstuck said the mobile operators were currently forced to use their existing spectrum inefficiently, because they had to adopt what was spectrum suitable for 3G, for 4G cellphone operations. Their existing spectrum was “not ideal” for high speed broadband usage, he said.
Goldstuck said the word “auction” was likely to be a bit of a misnomer, as the mobile operators would likely to asked to submit bids for spectrum that was made available, and Icasa would assess those bids and then allocate the spectrum in terms of a formula of its own, and in a manner that would also likely try to account “for everybody as far as possible”.
Icasa said it would conduct a bidder seminar on February 28, followed by mock auctions from March 1 to 3 with the individual bidders.
After that, the auction stage would begin on March 8, with the main online auction taking place from March 10, the regulator said.
In late afternoon trade, MTN’s share price was flat, 0.03 percent higher at R182.78, Vodacom down 0.04 percent at R149.01 and Telkom 0.94 percent up at R43.15.
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