Spectrum auction will boost SA economy - Vodacom

2016-07-21 10:10 - Gareth van Zyl, Fin24
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Johannesburg - South Africa’s biggest mobile network Vodacom [JSE:VOD] has given the thumbs up to a local plan to auction off radio frequency spectrum for high-speed broadband.

The Independent Communications Authority of South Africa (Icasa) on Friday invited applicants to apply for spectrum licences in the 700MHz, 800MHz and 2.6GHz range.

Icasa said that the main aim of the licensing is to ensure nationwide broadband access for all citizens by 2020. The move is further expected to boost local mobile internet speeds.

Vodacom has previously also called for more access to frequencies as the mobile operator has resorted to refarming spectrum to provide limited LTE coverage in the country.

And Vodacom on Thursday, in its quarterly update to shareholders, welcomed the Icasa auction, which is expected to happen in January 2017.

“We welcome the announcement made by the Independent Communications Authority of South Africa on 15 July 2016, inviting operators to participate in an auction of much-needed spectrum,” said Vodacom in its quarterly update.

“This is a major progressive step for the economy, South Africa's telecommunications industry and the country as a whole.

“The allocation of spectrum will be transformative from a broadband access perspective and is expected to make reaching the goals set out by government's SA Connect policy more achievable,” Vodacom added.

While Vodacom has welcomed the auction, rival network Cell C has this week questioned the timetable, reserve price and political buy-in for the spectrum sale.

Applicants for the auction will qualify to only bid on one of the spectrum lots which range from ‘lot B’ to ‘lot E’. Licences will be valid for 15 years from the date of issue.

But the reserve price of the lots is R3bn, said Icasa in a government gazette.

“On an initial reading the time-table seems quite rushed and the reserve price for the spectrum lots appears high especially as the spectrum lots are not equally valuable,” said Cell C’s chief legal officer, Graham Mackinnon, in an emailed statement to Fin24 earlier this week.

Cell C’s Mackinnon said that Icasa may be at odds with the Department of Telecommunications and Postal Services regarding the auction.

“It is an interesting development but we are concerned that Icasa has issued the ITA (Invitation to Apply) without a clear policy directive from government,” said Mackinnon. “We know for a fact that the Department of Telecommunications and Postal Services is in the process of finalising its policy in this regard and so by issuing the ITA before this is finalised, may create unnecessary tension.

“We are still studying the ITA to assess its terms and will apply if the terms are fair,” Mackinnon added.

Cell C, though, still cautiously welcomed the spectrum auction but called for government buy-in as well.

“Operators cannot effectively roll out next generation technologies without this spectrum,” said Mackinnon.

“However, it needs to be done with the buy-in of all stakeholders, obviously including government as spectrum is a national resource,” Mackinnon added.

Cell C is South Africa's third largest mobile network with approximately 24 million customers while Vodacom is the country’s largest with 35.1 million connections.

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