R14.4bn injected into the fiscus
Vodacom and MTN spend more than R5bn each for share of new spectrum. RAMAPHOSA’S REFORM AGENDA
South Africa’s much vaunted, but delayed, high-demand radio frequency spectrum auction – a crucial component of President Cyril Ramaphosa’s economic reforms agenda – was concluded on Thursday.
The Independent Communications Authority of South Africa (Icasa) hailed the auction a success, as it raked in more than R14.4 billion for the fiscus.
The auction saw six qualified bidders – JSE-listed Vodacom, MTN and Telkom, as well as Cell C, Liquid Intelligent Technologies and Rain Networks – securing valuable new spectrum.
Economists, business leaders and organisations such as the International Monetary Fund, have lamented the lack of “high-demand spectrum” in the country as one of the major bottlenecks to SA achieving higher gross domestic product growth.
The last time SA auctioned spectrum on a permanent basis was in about 2005. Over the past decade, there have been several delays in Icasa rolling out new broadband spectrum, which better caters for new generation 4G and 5G technologies.
“It always seems impossible until it is done,” Icasa says in its statement on the spectrum auction, quoting SA’s late former president Nelson Mandela.
Icasa chair Dr Keabetswe Modimoeng described the process as “complex” and thanked bidders for their cooperation and participation.
“This was our inaugural radio frequency spectrum auction, and we are really grateful to have reached this stage without any hassles and challenges...
“This shows South Africa’s capability as an investment-friendly destination,” he said.
“We look forward to all South Africans benefitting from the dividends of these regulatory interventions, and to seeing the proceeds of the auction being put to good use for the benefit of all South Africans.
“This auction was indeed in the best interest of all South Africans, as will be the subsequent licensing interventions post government’s revision of the Wireless Open Access Network Policy.”
Vodacom and MTN secure lion’s share
As expected, the country’s two largest mobile operators and data providers, Vodacom and MTN, have secured the lion’s share of new spectrum, spending more than R5 billion each.
The R14.4 billion is the total amount generated from the opt-in phase auction on 8 March, and the main auction on 10 to 17 March, Icasa said. The main auction stage comprised 58 rounds of bidding.
In a JSE Sens statement, MTN SA hailed the spectrum auction as “historic”, noting the group “has secured high-demand spectrum to support its 4G and 5G expansion drive”.
“During the main phase ... MTN SA acquired a total of 100MHz across the 800MHz, 2 600MHz and 3 500MHz frequency bands and will pay a total of R5.2 billion for the spectrum,” it said.
“This compares favourably with global benchmark averages of approximately $0.083/MHzPOP [about R1.24/MHz-POP] – according to Coleago Consulting – for spectrum in similar auctions.”
“This is the first time in approximately 17 years that spectrum has been released on a permanent basis in South Africa and increases MTN SA’s total permanent spectrum holdings from 76MHz to 176MHz,” MTN noted.
“The spectrum has been allotted for a 20-year period and on a technology-neutral basis.
“The release of high-demand spectrum is a significant step forward for South Africa in the implementation of the key structural reforms needed to drive economic growth,” said MTN Group chief executive Ralph Mupita.