Telkom continues with lawsuit despite spending more than R2-billion on spectrum

Telkom will continue with its court application to “ensure that the licensing of spectrum promotes effective competition” in the telecommunications sector, it said on Monday. 

The country’s third largest telecommunications company, which spent more than R2-billion to buy spectrum on auction this month, said in a statemernt it was pursuing legal action to declare the entire auction invalid because of the design of the spectrum process.

Spectrum is the network used by mobile operators to send radio frequencies between their towers and cellular devices.

The partly state-owned telecommunications company received the third-most spectrum lots at the auction. 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.

The auction raised R14.4-billion — R6-billion more than initially expected — for the fiscus. 

Telkom said since its inception it has not owned sub 1GHz spectrum. The 20 megahertz of 800MHz it received at the auction, once available, will enable a more efficient network and increased coverage and capacity. 

“Whilst Telkom has been able to secure the much-needed sub 1 GHz in the spectrum auction, we were constrained in our ability to acquire the amount of spectrum that we need to compete effectively,” the company said.

“To secure its ability to compete effectively in the mobile market, Telkom persists with its court application to ensure that the licensing of spectrum promotes effective competition in the mobile market”.

The court hearing will start on 11 April and Telkom said the outcome may affect the auction and its outcome.

“The long-term strategic benefits of the spectrum acquisition outweigh the short-term financial impact,” it said.

President Cyril Ramaphosa has called the spectrum auction an important achievement, noting that it had been 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 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,” Ramaphosa added.

Anathi Madubela is an Adamela Trust business reporter at the M&G.

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Anathi Madubela
Anathi Madubela is a business journalist with a keen interest in the retail sector.

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