Big development in South African network operator industry

Communications minister Solly Malatsi has directed the Independent Communications Authority of South Africa (Icasa) to investigate whether new network operators should be licensed.

In a notice published in the Government Gazette on Wednesday, 21 May 2025, Malatsi gave the sector regulator six months to conduct an inquiry and produce its report.

The notice only covers whether Icasa should issue more individual electronic communications network services (I-ECNS) licences.

I-ECNS licences allow holders to build and operate physical communications network infrastructure anywhere in South Africa.

To offer communication services over that physical infrastructure, an electronic communications services (ECS) licence is required.

Both ECNS and ECS licences are categorised into individual and class licences. Individual licences are for national operators, whereas class licences are for local or regional operators or service providers.

Malatsi explained that the inquiry would help determine whether there was a need and demand for new I-ECNS licensees.

“On the one hand, about 490 individual electronic communications network services licences already exist,” he said.

“On the other hand, it is not possible to apply for new individual electronic communications network services licences, as it requires a ministerial policy direction.”

Since prospective market entrants can’t get new licences unless the minister directs Icasa to issue an invitation to apply (ITA), a secondary market for licences has emerged.

“This has resulted in the trade of I-ECNS licences, where the role of Icasa is limited to considering applications for licence transfers,” the minister’s notice stated.

Malatsi said Icasa’s inquiry should consider four things:

• Whether there is a need to invite, accept, and consider applications for new I-ECNS licences.
• If more licences would improve competition in the market.
• Whether and how new licences would contribute to universal network access.
• If the benefits of new market entrants outweigh the costs, including the cost for Icasa to monitor and enforce compliance, and the burden on the environment.

Last new licences issued 15 years ago

Malatsi’s directive for an inquiry follows recommendations from the Internet Service Providers’ Association of South Africa (Ispa) that the minister and Icasa open applications for new licences.

In 2023, Ispa explained that the minister could issue a standing policy direction instructing Icasa to accept I-ECNS applications at any time.

Similarly, Icasa could issue an ITA for new I-ECS licences at any time and make that invitation perpetual.

“There is no reason under the Electronic Communications Act why any qualifying telecoms market entrant cannot apply to Icasa for an I-ECS or I-ECNS licence,” Ispa stated.

“The bulk issuing of more than 500 I-ECS and I-ECNS licence pairs in 2009 and 2010 removed any policy rationale for restricting the issuing of licences.”

Ispa regulatory advisor Dominic Cull said the current situation created artificial barriers to entry to an ICT market that was crucial for South Africa’s future growth and aspirations.

According to Ispa, facilitating greater market entry would boost competition and transformation.

It is understood that Icasa has been waiting for any Minister of Communications to publish a policy direction before issuing any ITAs to avoid stepping on political toes.

In 2016, the regulator tried to issue ITAs for licensing high-demand radio frequency spectrum—wireless network capacity—and was taken to court by then-minister Siyabonga Cwele.

Ispa also said that the current situation has led some licensees to view their licences as a ticket to get rich.

Instead of using the licences to provide telecoms services, they simply sit on them until a buyer comes along.

Cull said that small businesses looking to grow their footprints had no option but to purchase a licence on a willing-seller, willing-buyer basis and apply to Icasa for a transfer.

“This costs a significant amount of money — generally more than R1 million — and the Icasa application process will take a minimum of five to eight months to be completed,” Cull said.

One Ispa member, a black woman-owned service provider, previously said the concept was counterproductive and made it difficult for SMMEs to obtain licences cost-effectively.