South Africa gets R14.4 billion in spectrum sale to MTN, Telkom

The government’s Operation Vulindlela is making major strides in its objective of modernising and transforming key network industries that will drive South Africa’s fourth industrial revolution, President Cyril Ramaphosa wrote in his weekly newsletter on Tuesday

Ramaphosa commended the auction of high-demand spectrum facilitated by the  Independent Communications Authority of South Africa (Icasa), which raked in R14.4-billion for the fiscus. 

Icasa began the auction process for high-demand spectrum on 8 March — allowing eligible mobile network operators to bid for international mobile telecommunication spectrum licences. Six operators — Cell C, Liquid Telecoms, MTN, Rain Networks, Telkom and Vodacom — qualified as bidders. The final bidding stage concluded on Thursday 17 March

“This is a significant milestone in our reform agenda, which will, as we have said before, drive growth and transformation in our economy,” Ramaphosa said his newsletter.

He said the licensing of spectrum was one of the major reforms his government was  implementing to “modernise and transform key network industries such as energy, telecommunications, transport and water provision” under Operation Vulindlela. 

In light of the benefits arising from a broader spectrum, the government aims to provide free network connectivity at public schools, health facilities and police stations over the next three years. 

“The auction of spectrum is an important achievement. It was delayed for many years due to the policy drift, state incapacity and vested interests that were a feature of the era of state capture,” the president said.

“The fact that we have now completed this process reflects the determination of this administration to undertake — and accelerate —  the far-reaching reforms that our economy needs to grow and create jobs.

“Every South African who uses a mobile device will feel the benefits of this reform, especially the poor and those who currently don’t access the internet due to high costs or a lack of coverage,” he added.

Auction outcome

Partly state-owned tele­communications group Telkom received the third-most spectrum lots, costing the company more than R2.1-billion.  Vodacom and MTN —  the country’s leading mobile operators — were awarded the most lots, at a cost of more than R5.3-billion and R5.1-billion, respectively. 

Cell C, Rain and Liquid Telecoms won smaller spectrum lots worth a combined more than R1.8-billion in total.

However, the anticipated lower cost of data and improved rural networks might not reach South Africans just yet as major operators like Vodacom and MTN would want to make up the capital used to obtain spectrum licences before considering a cut in data rates.

In fact, even higher data rates could be looming, as the Mail & Guardian has previously reported. For this same reason, companies might find it financially difficult to expand to rural areas in the near future, widening the gap between those with access to digital telecommunications and those without.

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Eunice Stoltz
Eunice Stoltz is a general news reporter at the Mail & Guardian.

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