This table shows what the 5G spectrum fight in South Africa is about

The auction of highly sought-after radio frequency spectrum in South Africa has been delayed after Telkom and Etv won an interdict against the Independent Communications Authority of South Africa (ICASA).

Telkom launched its legal challenge at the end of last year. The company said that if ICASA goes ahead with the auction as planned it will mess up South Africa’s telecommunications industry for 20 years.

It also warned that mobile data prices in South Africa will remain high if ICASA does not make changes to the spectrum auction.

Telkom’s two major complaints about the auction were as follows:

Firstly, several important spectrum bands in the 700MHz and 800MHz regions are not commercially viable as they are still in use by broadcasters.

Telkom wants assurances from the High Court that the government will be forced to migrate broadcasters out of those bands, as it will have no incentive to do so once it has the money from the auction in its pocket.

Secondly, Telkom argued that ICASA went ahead with the process without first finishing its Mobile Broadband Service Market Inquiry. Telkom contends that this is unlawful and irrational.

The root of this argument is that Telkom does not believe ICASA is doing enough to break the dominance of Vodacom and MTN in the market.

Exclusive “opt-in” round

In addition to the court case brought by Telkom and Etv, MTN has launched its own legal challenge against the structure of ICASA’s auction and the way it classified network operators into “Tier-1” and “Tier-2” categories.

MTN objected to ICASA’s plan to exclude Vodacom and MTN from the first round of the auction, where certain lots of spectrum will be made available to smaller network operators.

ICASA termed this exclusive round the “Opt-In Scheme”.

Spectrum set to be part in the opt-in round includes frequencies in the 3,500MHz band — a particular sore spot for MTN because it needs spectrum in this band to advance its 5G roll-out in South Africa.

MTN warned that ICASA risked undermining its auction by allowing smaller operators to potentially pick up extremely valuable spectrum for much cheaper than it would have been willing to pay.

It also warned that if smaller operators walked away with all the 3,500MHz spectrum, the larger network might not be interested in bidding on the scraps that remain.

Part of MTN’s argument against this “Opt-In Scheme” is a technical point — that ICASA blundered in its definition of Tier-1 and Tier-2 operator.

Vodacom has filed a counter-application against MTN’s, saying that there was a way to continue with the auction as-is while also allaying MTN’s fears. Vodacom’s application will be heard together with MTN’s this month.

Spectrum holdings, subscriber numbers, and network performance of cellular network operators in South Africa

One of MTN’s arguments against ICASA’s plan to exclude it and Vodacom from the first round of the auction is that they are struggling the most with capacity because they are serving the most clients.

“The least efficient users of spectrum and the licensees with fewer number of customers will be privileged over the most efficient (and needy) licensees in the acquisition of spectrum,” MTN stated.

To see which operators are doing the most with the spectrum they have, and making the most of their investment, we looked at how efficiently each of the five major players in the space is using their spectrum together with the average download speed of their network.

We added up all the spectrum suitable for mobile networking that has been assigned to operators, then divided their number of subscribers (in thousands) by the amount of spectral bandwidth they have (in megahertz).

To calculate their Spectral Efficiency and Average Speed (SEAS) factor, we then multiplied that number by their average download speeds (in Mbps), as measured by MyBroadband in 2020. To make the final number easier to read, we divided it by a thousand.

The following table summarises the figures used to calculate which networks in South Africa serve the most customers, and provide the best network performance, with the least amount of spectrum.

Network operator MTN Vodacom Telkom Cell C Rain Liquid
Spectrum holdings 86 MHz 81 MHz 142 MHz 76 MHz 44 MHz 90 MHz
Subscribers 31.2m 42.8m 14.9m 11.8m 1m No data
Subscribers per MHz 363k 528k 105k 155k 22.7k No data
Average download speed (2020) 52.84 Mbps 29.39 Mbps 21.58 Mbps 17.46 Mbps 11.90 Mbps No data
SEAS Factor 19.2 15.5 2.3 2.7 0.27 No data
Network investment (CAPEX, 2017–2019) R28.5m R28.3m R24.2m R3.58m No data No data
Market share (revenue) 25.6% 40.7% 24.9% 8.8% No data No data

Delayed release of spectrum

ICASA has said that as a result of the interdict granted to Telkom, the spectrum auction will have to be delayed.

Telkom is asking the court to order that South Africa’s migration from analogue to digital broadcasting — which will free up the 700MHz and 800MHz bands — be completed by 30 June 2021.

However, President Cyril Ramaphosa said during his State of the Nation address that the digital migration will only be completed by March 2022.

“We have never been so close to licensing high demand spectrum,” said ICASA chairperson Keabetswe Modimoeng.

“We were literally three weeks away from auctioning this much-needed resource that would have seen South Africans benefit… in terms of reduced data costs and improvement in the quality of service and experience.”

Modimoeng said that the ICASA Council has resolved to exhaust all legal avenues.

“We were here in 2016 when an interdict on a similar matter was issued, and that led the Authority to enter into an out-of-court settlement, withdrawal of the ITA and other forms of mediation,” stated Modimoeng.

“Such interventions took us nowhere. We are not going back there. It is our considered view that the best option is to exhaust all possible legal avenues at our disposal, including appeals so to ensure that this sensitive licensing process is not only defined by industry players but also by the public interest. We, however, await the reasons for the judgement.”

ICASA noted that Telkom’s opposition to this licensing process has been consistent, as it was also one of the three applicants in the 2016 litigation against the regulator.

“The delay in the licensing of high demand spectrum has huge implications in terms of competition in the mobile services market as well as reduction of cost to communicate particularly data costs for consumers and business,” ICASA stated.

“For as long as there is an interdict in place, South Africans will continue to bear the brunt for high data costs, ineffective competition, and a deprived economy.”

Now read: Vodacom gunning for top spot with big network investment

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This table shows what the 5G spectrum fight in South Africa is about