SA is one step closer to a future of widespread 5G telecommunications as MTN and Vodacom led buyers in the long-delayed radio frequency spectrum auction, which raised more for government coffers than had been expected.
The Independent Telecommunications Authority of SA (Icasa) said on Thursday that the auction of the spectrum, the government-controlled airwaves that are licensed to mobile phone companies, raised R14.4bn, with MTN spending R5.2bn and Vodacom writing a R5.38bn cheque.
The regulator said the total amount generated from the opt-in phase of the auction on March 8, and the main auction stage on March 10, ending on Thursday, will go to the national fiscus.
The first round raised R2.65bn, with Rain spending R1.15bn and Telkom R1.5bn.
The main auction stage comprised 58 rounds of bidding among the six candidates: Cell C, Vodacom, Rain, Liquid, MTN and Telkom. The regulator said there was one unsold spectrum lot of 2x10MHz in the 800MHz band, which will be licensed sometime in the future.
Unsurprisingly, SA’s two largest operators shelled out the most cash for new radio waves that will remain licensed for the next 20 years, spending a combined R10.58bn or 73% of the total raised.
MTN said it had secured 100MHz across the 800MHz, 2,600MHz and 3,500MHz frequency bands.
“Securing this high-demand spectrum is critical in positioning MTN SA, the second-largest operation in the MTN Group, for sustained and profitable growth into the future,” said MTN group CEO Ralph Mupita. He added that the operator had secured an optimal mix of frequencies to push MTN SA’s data traffic for 4G and 5G services.
Rival Vodacom took 110MHz in the 700MHz, 2,600MHz and 3,500MHz band.
The bands at 2,600MHz and 3,500MHz are widely accepted as best for 5G service.
“Once the auction process is fully concluded, Vodacom’s immediate focus will be on the deployment of valuable spectrum to extend both 4G and 5G network coverage to more parts of the country and improve quality of service while we continue to address the cost to communicate,” said Vodacom group head, Shameel Joosub.
The completion of the auction is a major victory for Icasa, which has been under pressure from mobile operators and President Cyril Ramaphosa to issue the licences.
The regulator spent much of 2021 redrafting its plan for the auction after an agreement with mobile operators, which was endorsed by the high court in September. The regulator had planned to auction about R8bn worth of broadband spectrum exactly a year ago, but the March 2021 deadline could not be met because of legal battles over the process.
By some estimates, Icasa had expected to make R11bn from the auction, with the Treasury having set aside more than R1bn to get the process wrapped up.
In a statement, Icasa chairperson Keabetswe Modimoeng said: “This was our inaugural radio frequency spectrum auction, and we are really grateful to have reached this stage without any hassles and challenges from the first day of the actual auction to date. This shows SA’s capability as an investment-friendly destination.”
With the main auction completed, the final piece will be the assignment phase, an administrative process to fine-tune the allocation of spectrum won by each of the operators.
The more than 10-year delay in allocating spectrum, referred to in the industry as the “spectrum crunch”, made the cost of telecommunications in SA among the world’s highest. This prompted Ramaphosa to list the issue as one of the most important in which reforms by his government could boost growth. The last time SA released spectrum was in 2004/2005.
Even as Icasa is proceeding with the auction, it has a number of issues to deal with to fully complete it, such as a legal challenge by Telkom and completion of the move from analogue to digital television.
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