Telkom’s game changer
The firm’s incoming boss says auction of new broadband spectrum will help attain equality
The long-awaited spectrum auction could “level the playing field”, says Serame Taukobong — who has recently helped turn Telkom’s mobile business into a real contender in a two-player dominated market.
Last month Telkom announced that Taukobong will take over as chief executive when Sipho Maseko steps down in June next year.
He will ascend to the helm of the partly state-owned telecommunications firm at a critical moment in its history: A decade since launching its mobile business, Telkom nudged out Cell C to become South Africa’s third-largest operator last year. Vodacom is the country’s biggest mobile operator, followed by MTN.
Taukobong has been credited with tripling Telkom Mobile’s customer base to 15-million since he joined the company in 2018.
The announcement comes as the company tussles with the Independent Communications Authority of South Africa (Icasa) over the spectrum auction, which Taukobong said “presents a very interesting opportunity to really balance competitiveness in the market”.
Taukobong told the Mail & Guardian this week: “The market has not opened up to new players. New players have not been able to get beyond the threshold that they want and spectrum is a good tool … to try to balance a competitive imbalance.”
Bringing balance
Spectrum — the radio frequencies used by the mobile industry to transmit information over the airwaves — has not been allocated in South Africa for almost a decade. The release of spectrum would allow telecommunication companies such as Telkom to provide faster internet and to roll out new-generation technologies such as 5G.
Last year, Icasa outlined plans to hold the auction by the end of March 2021. But the auction of R8-billion worth of new broadband spectrum was delayed when Telkom and MTN took the authority to court to challenge the process. Icasa is currently seeking an out-of-court settlement on the matter.
In the meantime, Icasa assigned temporary spectrum to companies to help them deal with the surge in demand for connectivity during the Covid-19 pandemic and the attendant lockdowns. This week, the regulator announced that licensees have until the end of November to return the spectrum.
Icasa chair Keabetswe Modimoeng said the release of the temporary spectrum has “contributed immensely to the fight against the Covid-19 pandemic and to ensuring that South Africans were, and continue to be, able to communicate during these unprecedented times”.
However, Modimoeng added, “the authority cannot allow the temporary spectrum assignment to assume a state of permanence”. Icasa emphasised the need to focus on the permanent licensing of spectrum.
The temporary spectrum improved data speeds “significantly”, Taukobong said, showing “access to the critical spectrum makes the playing field slightly more equitable”.
Responding to criticism that Telkom has intentionally delayed the auction, Taukobong conceded that “for some it comes across as a play”.
“But for us it was critical that when the spectrum allocation happens, it does take into consideration the market competitiveness and it does take the need to bring in other players into consideration,” he said.
“Because, once you make the award, it is a 20-year commitment. And if you don’t take the market competitiveness into consideration, then you’re going to make those allocations on a market that is not balanced.”
Taukobong said it was not in Telkom’s interest to delay the process. “But one cannot overlook those principles and not have Icasa and government look into whether we have a competitive environment — especially with a tool like spectrum, which really drives competitiveness in the market.”
Driving growth
The release of new broadband spectrum has been identified by the government as a key reform for driving economic growth. The national treasury’s blueprint for economic growth, released in 2019, stated that the delay in the spectrum allocation process “is the single biggest constraint on the growth of the telecommunications sector and is a bottleneck for broader economic growth”.
The economic reconstruction and recovery plan launched last year as the country grappled with Covid-19’s onslaught notes that the spectrum allocation is “critical to unlocking investment in communications and the digital economy”. Spectrum allocation is one of the priorities of Operation Vulindlela, an initiative by the national treasury aimed at removing barriers to investment.
Taukobong agreed that spectrum release was critical to economic growth. “Access to the internet has a direct impact on the GDP,” he said.
The national treasury paper cited a Word Bank study that found a 10% increase in fixed broadband penetration leads to a 1.35% increase in GDP
growth in developing countries.
Covid-19 has made access to faster internet even more urgent, Taukobong said. “Everybody is working from home. Small businesses are closing their offices, but continue to work from home. Small businesses are showing up in more digital type propositions,” he added. “If you don’t have access to the internet, then all ambitions and dreams, Fourth Industrial Revolution, or anything else, are not going to materialise.”
Reflecting on Telkom’s history — beset by scandals and bad investments that saw its share price plummet until Maseko took the reins in 2013 — and where it is now, Taukobong said: “I’ve been at Telkom for the past few years and I guess I’ve contributed in my little way in getting the mobile business here. It’s a positive continuation for me.”
“Sipho has done a lot in really clearing up the legacy that was in Telkom. And I think we are primed now to take it to the next step and ask: ‘How do we move this company to fully recognise its ambition of driving the digital transformation in our country?’”