Without Vodacom there is no Rain – Telkom

There would be no Rain if it was not for its lucrative contract with Vodacom, the head of regulatory affairs and government relations at Telkom, Siyabonga Mahlangu, has told MyBroadband.

Mahlangu was providing context for Telkom’s decision to take the Independent Communications Authority of South Africa (ICASA) to court over the way it plans to run the auction for highly sought-after radio frequency spectrum.

One of the two major problems Telkom raised with the auction is that ICASA is not doing enough to give smaller operators a chance against “the duopoly” — Vodacom and MTN.

Telkom contends that ICASA must first complete its mobile service market inquiry before deciding how to auction the spectrum.

A common rebuttal to Telkom’s arguments is that it is currently sitting on far more spectrum than any of the other mobile network operators in South Africa.

MTN has a total of 86MHz of bandwidth suitable for cellular networking, Vodacom has 81MHz, and Telkom has 142MHz.

When asked about this, Mahlangu argued that it is not only ownership of spectrum that should be considered, but access to spectrum.

“MTN is sitting with access to all of Cell C’s spectrum in addition to the [1800MHz spectrum] from Liquid [Telecom],” Mahlangu said.

“If you look at Vodacom, it has access to Liquid Telecom’s 3.5GHz and Rain’s 2.6Ghz spectrum.”

In addition to this argument, Mahlangu also stated that Telkom is currently the only infrastructure competition to Vodacom and MTN.

Cell C recently started migrating its contract and broadband subscribers from its own network onto Vodacom’s. This forms part of its network strategy where it will switch off its own radio network and partner with the “best-of-breed on both infrastructure and services”, Cell C said.

Rain operates its own infrastructure, but according to Mahlangu, it is wholly dependent on a lucrative deal that allows Vodacom to roam on its network.

“If you take out the Vodacom contract, there is no Rain,” Mahlangu said.

Telkom laid a complaint against the Vodacom-Rain deal at the Competition Tribunal last year, arguing that it should be declared a merger because the agreements grant Vodacom use and control over the deployment of Rain’s spectrum.

Similarly, Liquid Telecom is not a cellular infrastructure competitor despite the 90MHz of spectrum at its disposal. Instead, it has inked roaming deals with established players who are desperate for spectrum.

Rain and Vodacom responds

Rain CEO Willem Roos said that he could not give detailed answers to MyBroadband’s questions regarding Telkom’s claims due to the ongoing legal case.

“In addition to our wholesale operations, Rain has rapidly built a significant retail business in the 4G/5G data market in South Africa, which competes fiercely with other players in the market,” Roos said.

Roos previously said that they provide non-exclusive roaming services to Vodacom through an arrangement which has been scrutinised and approved by the Competition Commission and ICASA.

Vodacom declined to comment.

“We take note of the concerns raised by Telkom in your request for comment and are aware there are multiple legal processes currently underway in this regard. We will provide a more detailed update once we have a settled position on these proceedings,” Vodacom stated.

Vodacom CEO Shameel Joosub previously told MyBroadband that it pays “a few hundred million” to roam on Rain’s network.

Cell C responds

Regarding Telkom’s allegations that “MTN is sitting with access to all of Cell C’s spectrum”, Cell C stated that it uses its spectrum on a new virtual network that MTN provides.

“Cell C is still in full control of the spectrum and using it to support its customer base,” the company said.

“The Cell C-MTN roaming agreement is in line with shifts in the global telecoms industry to make more efficient use of existing network infrastructure, and similar to other local examples Vodacom-Telkom, Vodacom-Rain, and MTN-Liquid.”

Cell C argued that its deal with MTN does not reduce competition — it enables operators to continue competing on services, innovation and prices, while achieving savings on infrastructure.

“The Cell C-MTN agreement was scrutinised by the regulatory authorities and both the Competition Commission and ICASA are satisfied that it meets the regulatory requirements,” Cell C said.

MTN and Liquid Telecom declined to comment by the time of publication.

Now read: MTN threatens legal action against ICASA over spectrum auction

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Without Vodacom there is no Rain – Telkom