Rain and Telkom the first spectrum winners — blow R2.7 billion

Rain and Telkom were the first winners in South Africa’s radio frequency spectrum auction, and Cell C was the first loser.

The Independent Communications Authority of South Africa (Icasa) kicked off its spectrum auction on Tuesday with the Opt-In stage.

Spectrum is the raw capacity mobile network operators use to communicate between their towers and cellular devices.

Icasa is releasing the first significant chunks of spectrum suitable for 4G and 5G networks in years.

Regulators worldwide use auctions to help determine who should receive this hotly contested resource.

The Opt-In Auction was limited to four of South Africa’s smaller wireless operators: Cell C, Liquid Intelligent Technologies, Rain, and Telkom.

Only two bidders could win in this round.

Icasa reported that Liquid did not bid.

The other three carriers submitted their bids in person between 10h00 and 12h00 this morning, and Icasa said their evaluation was carried out in front of all authorised representatives.

The table below summarises what the winners received and how much they bid.

Winner 700 MHz band 800 MHz band 2600 MHz band Price
Rain 2×10 MHz 10 Mhz R1,151,274,105.50
Telkom 2×10 MHz R1,504,815,407.10
Total R2,656,089,512.60

Icasa chair Dr Keabetswe Modimoeng encouraged those who could not make the cut not to lose hope, and to continue supporting the process until the end.

“History has been made this morning, and we are highly grateful to the participants during this phase,” Modimoeng stated.

“As stated in the Invitation To Apply, there can only be two winners this time around, and we encourage those who did not make it to continue supporting this process as it only meant to benefit the country and its citizens.”

Modimoeng said the spectrum auction would have significant economic and social benefits for South Africa, especially when the economy is emerging from the ravages of the Covid–19 pandemic.

“This process provides a critical stimulus for economic recovery and has the potential to stimulate employment by leveraging on ICT networks and digital platforms to deliver economic value for the South African society,” said Modimoeng.

The main auction stage will begin on Thursday, 10 March 2022, using an online platform.

Vodacom and MTN will be able to join the other four operators in bidding for spectrum during this stage.

Bidding will be open between 09h00 and 17h00 during business days until the main auction stage concludes.

Portrait of Siyabonga Mahlangu, Telkom Group Executive: Regulatory Affairs and Government Relations
Siyabonga Mahlangu, Telkom Group Executive: Regulatory Affairs and Government Relations

While Telkom is participating in the auction, it had also launched a High Court bid to have the whole process invalidated.

Its court date is set for 11–14 April 2022, and it filed an answering affidavit to respondents in the case this morning.

Among Telkom’s concerns with Icasa’s auction is that some of the lower-frequency spectrum — like the lot it bid R1.5 billion on today — is still occupied by old analogue TV signals.

Telkom also believes that it is being disadvantaged in the auction, and that Icasa is entrenching Vodacom and MTN’s positions of power in the market.

The auction rules will only allow Telkom to gain a maximum of 45 MHz of additional spectrum, whereas Vodacom and MTN could gain up to 110 MHz.

This is because Telkom’s spectrum holdings are much greater than either of the two big players, and Icasa has set caps on how much spectrum any single player is allowed to have.

However, Telkom regulatory affairs head Siyabonga Mahlangu has argued that MTN and Vodacom have agreements with companies like Rain and Liquid that amount to spectrum sharing.

This spectrum should have been taken into account when calculating the spectrum caps, Mahlangu stated.

Icasa reaffirmed that there is no legal impediment to the auction proceeding.

“As matters stand, Telkom itself is a participant in the process; and as per the outcomes of today, has emerged as a winning bidder in the Opt-In auction,” Modimoeng said.

“The Authority remains committed to successfully completing the auction and will strongly oppose all efforts aimed at undoing the economic and social gains arising from the process.”

Now read: Big Cell C spectrum question

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Rain and Telkom the first spectrum winners — blow R2.7 billion