Spectrum auction 'on course' to begin in March next year, Icasa tells Parliament

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Icasa plans to publish the invitation to apply for spectrum on 10 December, and the application process will close on 10 January 2022.
Icasa plans to publish the invitation to apply for spectrum on 10 December, and the application process will close on 10 January 2022.
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  • Icasa told Parliament that it plans to publish the invitation to apply for spectrum on 10 December.
  • The regulator said applications from prospective bidders will be accepted from December and close on 10 January 2022.
  • Qualifying bidders for the licensing of the spectrum will be announced on 21 February next year, while the auction is due to start on 1 March 2022.

The Independent Communications Authority of South Africa (Icasa) told Parliament's Portfolio Committee on Communications that it was on course to finally begin the auction of spectrum to licence-holding bidders at the beginning of March 2022.

The briefing to the committee on Tuesday morning comes after many delays in the release of spectrum to improve data connectivity across the country with significant potential for benefits for business as well as reductions in data costs.

However, collapsing talks between Icasa and companies in September; litigation from eTV earlier this year, and from Telkom in December 2020; have delayed the auction and ultimate release of spectrum was delayed multiple times.

Icasa plans to publish the invitation to apply for spectrum on 10 December, and the application process will close on 10 January 2022.

Deputy Communications Minister Mohlopi Mapulane told the committee that the qualifying bidders for the licensing of the spectrum will be announced on 21 February next year, while the auction is due to start on 1 March 2022.

"From the ministry's side, we express our gratitude that litigation in the process has since been included and Icasa has published the truncated timetable for the auction process until 2022," said Mapulane.

Mapulane said the department was "comfortable with the process" as it was unfolding and expressed confidence that litigation and disputes between and among companies would not stymie the latest deadlines.

"As matters stand, there is no outstanding litigation on the process. In terms of the different timetables Icasa has set for itself, we are comfortable with the process. From their report, it does not seem like there were many complaints received from broadcasters," Mapulane said.

Icasa chairperson Keabetswe Modimoeng said on Tuesday the public general consultation rounds closed for input of how to configure the auction of spectrum.

"We will work on the invitation to apply and publish it in December with a closing date in January. We will move to announce qualified bidders [thereafter], and in March, we will commence with the auction process," said Modimoeng.

Modimoeng said Icasa still had confidence in the process of an auction as a way of allocation spectrum as "global best practice", saying it was an open and transparent process that ensured that the authority raised capital, and that those who value spectrum pockets the most, get them.

"When we announced this, there were many players that litigated against us. We embarked on another process to introduce provisional spectrum licensing. This will begin from tomorrow until 30 June 2022. Through this process, we have managed to raise R200 million for the national fiscus," he said.

Icasa said internet service providers (ISPs) that did not have a spectrum licence could still still participate through the Wireless Open Access. Between now and March 2022, Icasa will conduct research and interact with other countries that license WOAN to improve South Africa's implementation.

Booster for Broadband Infraco

Along with the release of spectrum, the Department of Communications was working to revive its ITC infrastructure entity Broadband Infraco (BBI) and get it in shape as a going concern ahead of its merger with Sentech.

BBI CEO Andrew Matseke said the struggling information technology entity was working to become sustainable and aimed to grow revenue by upgrading and expanding its network.

"We have been working on a turnaround plan that covers sales activities, the issues of BBI not having an ECS [electronic communications service] licence and the increase in capacity on the network and several internal processes that will enable the company to operate efficiently," said Matseke.

Matseke said BBI needed R1 billion in critical investment during the course of the next four years with potential to grow the market share of BBI's revenue from 10% of the wholesale market to 20% market share in wholesale connectivity at least.

"We have a focus on building a sales pipeline. In 2018/19, we met our target for sales contracts but there have been changes in the market since and we have regressed from the high that we had in that year. We experienced growth in the small to medium ISPs," Matseke said.

Mapulane said while the department monitored the merger between Broadband Infraco and Sentech, the former has been underperforming because of underinvestment in infrastructure. The last significant shareholder investment into the entity was made in 2010, he said.

"The shareholder loans have since been converted into equity. This results in a net asset value and an opportunity to go to the financial markets to raise the required capital to invest in critical infrastructure. It will raise R1 billion over the course of four years to invest in infrastructure," Mapulane said.

Mapulane said finance institutions like the Development Bank of Southern Africa, the Independent Development Trust and others in the private sector will be approached to raise capital to develop new infrastructure for Broadband Infraco, as approaching the fiscus was not an option.

He said R460 million has been invested in infrastructure, but this was not sufficient. After the conversion the entity will be able to ramp up performance as it is not possible to approach the national fiscus for funding at this time, so the entity must approach the markets, he said.

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