Cell C loses spectrum after failing to pay R288 million

Cell C has forfeited the spectrum it won at auction in March 2022 after failing to pay the R288 million it bid for the precious resource.

This is according to Vodacom regulatory affairs executive Andrew Barendse, in the footnotes of an affidavit filed as part of an unrelated court case.

Vodacom is suing the Independent Communications Authority of South Africa (Icasa) for approving certain spectrum pooling deals between MTN and other network operators.

Barendse said that, according to Icasa’s rules governing the spectrum auction, Cell C has forfeited its spectrum assignment by not paying for it.

MyBroadband contacted Cell C for comment on Barendse’s remarks, but it could not provide feedback by publication.

News that Cell C forfeited the spectrum comes as a shock, as executives said as recently as February that they were in a position to settle their debt to Icasa.

Cell C said it had paid some of the amount and was in discussions with Icasa to settle the balance. It did not reveal how much it had paid.

Icasa’s March 2022 auction involved a significant amount of high-demand radio frequency spectrum.

Spectrum is a critical resource for any mobile network operator. It represents the raw bandwidth at their disposal to transmit data between their towers and cellular devices.

Vodacom and MTN bought the most spectrum at the auction.

Vodacom bid almost R5.4 billion to acquire 110MHz of bandwidth across three frequency bands, with 80MHz concentrated in the IMT2600 band.

MTN bid nearly R5.2 billion for 100MHz spread over the IMT800, IMT2600, and IMT3500 bands.

Telkom bid R2.2 billion for 42MHz, and Rain R1.4 billion for 40MHz of bandwidth.

Cell C bid second least, offering R288.2 million for 10MHz in the IMT3500 band. Liquid bid R111 million for an extra 4MHz in IMT3500.

Schalk Visser, Cell C Chief Technology Officer

Reports that Cell C hadn’t settled its spectrum auction bill emerged in October last year. The company has been struggling financially, so it wasn’t surprising that it couldn’t raise the cash.

However, the operator assured it was in dialogue with the regulator regarding a payment plan.

Most recently, MyBroadband Insights’ latest network quality report showed that Cell C’s network quality had improved significantly in the past year.

Average download speed on its network increased from 28.70Mbps to 39.32Mbps between Q1 2023 and Q1 2024.

This improvement helped Cell C overtake Telkom and retake its third place behind MTN and Vodacom for the quarter.

Cell C CTO Schalk Visser said the company’s strategy of partnering with MTN and Vodacom rather than building and maintaining its own radio access network had paid dividends.

Rather than trying to out-invest Vodacom and MTN, which have been pumping R10 billion or more into their South African networks every year, Cell C elected to partner with them instead.

“Customers can enjoy quality connectivity and uninterrupted data services with reduced dead zones in previously underserved areas where lack of coverage impacted access to the Internet,” Visser said.