South Africa’s R8 billion 4G and 5G spectrum auction starts tomorrow — what to expect
The Independent Communications Authority of South Africa (Icasa) has issued a brief summarising the process being followed for its auction of sought-after radio frequency spectrum, which kicks off on Tuesday, 8 March.
Assuming all spectrum lots sell, the auction will raise a minimum of R8 billion for South Africa’s national fiscus.
Spectrum is the raw capacity mobile network operators use to communicate between their towers and cellular devices.
“The radio frequency spectrum in the 700 MHz, 800 MHz, 2600 MHz, and 3500 MHz bands is made available through this licensing process for the purposes of providing national broadband wireless access services to all South Africans,” Icasa stated.
Six network operators applied and qualified for the auction: Cell C, Liquid Intelligent Technologies, MTN, Rain, Telkom, and Vodacom.
“The importance of this licensing process lies mainly in the enhancement of competition in the mobile services sector, increasing broadband connectivity and coverage, as well as bridging the digital divide between urban and rural access to mobile broadband networks,” said Icasa.
The regulator said it held a bidder seminar on 28 February 2022 to familiarise participants with the auction process, and the tools and applications needed to submit bids.
“We appreciate the way bidders participated in the seminar, and the extensive engagement in that regard. This is exemplary of the commitment and positive spirit we all require during this delicate period,” said Icasa chairperson Dr Keabetswe Modimoeng.
Following the seminar, Icasa conducted mock auctions on 1–3 March 2022.
This was to ensure bidders were comfortable with the bidding process and reinforce the rules discussed in the seminar.
The Opt-In Auction
Icasa’s auction will begin tomorrow with the opt-in round, where eligible operators may submit bids to achieve a minimum spectrum portfolio.
Only tier-2 operators are eligible to participate in the Opt-in Auction. Vodacom and MTN are considered tier-1 operators; the rest are all tier-2.
During the Opt-In Auction, tier-2 operators may only bid on spectrum to ensure they achieve a minimum spectrum portfolio of 2×10 MHz in frequencies below 1 GHz, and 60 MHz above 1 GHz.
This will allow Telkom, Rain, and Liquid to bid on lower-frequency, sub–1 GHz spectrum, as they do not currently hold any of this precious resource.
Lower-frequency spectrum offers larger coverage areas per cell and better indoor penetration through walls.
Cell C and Rain could also bid on higher-frequency spectrum.
However, only two bidders can win in the Opt-In Auction to achieve a minimum spectrum portfolio.
“Bidders will submit their bids in person between 10h00 to 12h00 on 8 March 2022,” Icasa stated.
“The round will close early if bids from all qualified bidders were received before the scheduled end of the bidding window.”
Up to two Authorised Representatives of each qualified bidder, regardless of whether they are eligible to bid in the Opt-in Auction, will be allowed to observe and monitor the process.
Bid evaluation will be carried out in front of all authorised representatives and following the close of the bid submission window.
Icasa will make a public announcement at the end of the Opt-in Auction, including the winners, the amount of spectrum they won and the amount they will need to pay.
The Main Auction
The main auction will start on 10 March 2022 and be conducted using an online auction platform.
All six qualified bidders will be eligible to bid for spectrum in this stage. Bidding is scheduled for business days between 09h00 and 17h00.
The main stage is conducted in multiple bidding rounds and will end when bidders do not submit any newer bids or waivers.
Icasa will make a public announcement after the conclusion of this stage, including the winners for each lot and the amount they will need to pay.
The Frequency Assignment Phase
After the main stage is concluded, Icasa will conduct an in-person assignment phase with all qualified bidders.
There will be one clear business day between the conclusion of the main stage and the start of the frequency assignment phase.
This phase will be finalised in a single day.
“Our public interest mandate requires of us to be thorough in our approach to licensing and regulatory interventions,” Modimoeng said.
“We continue to take the necessary care in this spectrum auction process to ensure that there are no irreversible anti-competitive effects for the industry and the market.”
Modimoeng urged all bidders to work with Icasa to ensure the licensing of new spectrum can make a meaningful contribution to all of South Africa.
Icasa informed all stakeholders that its head office in Centurion is currently inaccessible to the public until further notice due to the ongoing spectrum auction.
The regulator’s services continue to be available online, via telephone (012 568 3000/1), and email.
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