Spectrum auction nets R14.4 billion - billions more than expected

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Icasa's spectrum auction bags more than R14 billion.
Icasa's spectrum auction bags more than R14 billion.
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  • Icasa had initially expected to raise R8 billion from the spectrum auction process.
  • Instead, it raised a whopping R14.4 billion.  
  • MTN alone will pay R5.2 billion - and says the rate it paid compares favourably with global benchmarks for spectrum in similar auctions.

The auction of broadband spectrum among six of the country's mobile network operators generated R14.4 billion, the Independent Communications Authority of South Africa (Icasa) announced as the process concluded on Thursday.

The amount is R6 billion more than the initial projection of R8 billion.

"The revenue collected from this auction totals more than R14.4 billion, which will go to the national fiscus," Icasa said.

Network operators Cell C, Liquid, MTN, Rain Networks, Telkom, and Vodacom took part in the three-day bidding process. 

In a statement, MTN said it acquired a total of 100MHz across the 800MHz, 2 600MHz, and 3 500MHz frequency bands which will support its 4G and 5G expansion drive.

The company, the country's second largest telecommunication provider, will pay R5.2 billion for the spectrum, which it says compares favourably with global benchmarks for spectrum in similar auctions.

MTN Group CEO, Ralph Mupita, hailed the release of high-demand spectrum was a significant step forward for South Africa in the implementation of the key structural reforms needed to drive economic growth.

"Securing this high-demand spectrum is critical in positioning MTN SA ... we have secured an optimal mix of low-band and mid-band frequencies for MTN SA that will support the data traffic we will carry for 4G and 5G services," said Mupita.

"We have secured this spectrum at a cost that is value accretive for our providers of capital, when you compare against global benchmarks," he added.

MTN SA will use the spectrum to expand 4G and 5G connectivity and enhance rural, peri-urban, and urban network coverage - in what is expected to help drive down communication costs.

Icasa said there was one unsold spectrum lot of 2x10MHz in the IMT800 band, which will be licensed in future. Vodacom and MTN were last allocated spectrum in 2004 and 2005, followed by Cell C in 2011.

"This was our inaugural radio frequency spectrum auction, and we are grateful to have reached this stage without any hassles and challenges from the first day of the actual auction to date," said  Icasa chairperson Keabetswe Modimoeng.

He described the auction as "in the best interest of all South Africans", as will be the subsequent licensing of the Wireless Open Access Network (WOAN), following the proposed amendment of a policy that governs its allocation. Cabinet last week announced the proposed amendment will be released for public comment.

According to Icasa, "the next stage in the auction process will be the assignment round, which is purely an administrative process and will be held on Tuesday, 22 March 2022, to determine the actual spectrum ranges to be assigned for all the lots bought in the various bands".

The auction was over the years hampered by various legal challenges, and its standing is still subject to the upcoming review lodged by Telkom, in a case to be heard between 11 and 14 April.

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