Telkom has called on the competition watchdog to investigate the Vodacom-Liquid Telecom deal, saying the partnership will give SA’s biggest mobile phone group an unfair advantage and cement its dominant position in the industry.
Vodacom teamed up with Liquid Telecom that essentially gives the company access to a coveted band of spectrum — radio frequency that allows mobile phone operators to send voice and data over the airwaves — to beat rivals to the launch of the ultra-fast 5G services later this year.
Telkom head of regulatory affairs Siyabonga Mahlangu said the deal gives Vodacom the band it had been after six years ago when the Midrand-based operator walked away from a R7bn takeover bid for Neotel, now part of Liquid Telecom, after almost two years of regulatory battles and legal opposition from competitors.
Vodacom wanted to buy Neotel to increase its spectrum and fibre network for broadband provision to consumers and businesses.
Mahlangu said regulators and competition authorities should investigate what deals such as the Vodacom and Liquid partnership mean for competition in the local mobile industry. As an industry player, Telkom has a duty to raise concerns, he said.
The partnership will have a direct impact on how the allocation of spectrum, expected later this year, will be done, he said, especially in the crucial 3.5GHz band.
According to international standards, a network provider needs to have 80-100MHz of contiguous spectrum in this band to provide proper 5G services. With access to Liquid’s 56MHz allocation, that puts Vodacom ahead of the pack if the auctions go ahead as planned, as it will need another 24MHz to reach the desired amount.
There are 116MHz available to network operators, according to industry regulator, the Independent Communications Authority of SA (ICASA), with Telkom holding the other 28Mhz for a total of 200Mhz.
Vodacom also has access to more spectrum through new entrant to the market, Rain, through a roaming agreement.
Mahlangu also cried foul over a roaming agreement between MTN and Cell C, saying the deal will in effect give MTN access to Cell C radio frequency spectrum. The deal, which frees up cash for the financially troubled Cell C, gives Cell C access to MTN’s network in areas where the former has not built its own infrastructure.
“We're not saying those agreements should not be in place,” Mahlangu said. Rather, they need to be scrutinised, he said, adding that spectrum is a tool that the regulator can use to make competition more fair in the telecom sector.
“These are effectively spectrum trading deals,” Mahlangu said, explaining that in effect roaming agreements give the large operators access to more spectrum, the lifeblood of the industry, in addition to strong financial positions.
But he defended Telkom’s own roaming agreement with Vodacom, saying Vodacom does not need access to its spectrum.
Vodacom and its nearest competitor MTN have been in the spotlight in recent months after a report into the mobile internet connectivity market by the Competition Commission found that the duo use their dominant position in SA to keep prices high.
The commission extended its deadline for the duo to slash prices by as much as 50% until the end of February, or face prosecution.
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