All eyes have shifted to the new high demand spectrum auction to be led by the Independent Communications Authority of South Africa (Icasa) by the end of March. Photo: Simphiwe Mbokazi
All eyes have shifted to the new high demand spectrum auction to be led by the Independent Communications Authority of South Africa (Icasa) by the end of March. Photo: Simphiwe Mbokazi

Industry excitement as Icasa charges on with spectrum auction

By Dineo Faku Time of article published Jan 13, 2021

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JOHANNESBURG - ALL EYES have shifted to the new high demand spectrum auction to be led by the Independent Communications Authority of South Africa (Icasa) by the end of March.

Icasa chairperson Keabetswe Modimoeng said that the authority remained committed to see the completion of the licensing process whose benefits included improved quality of service and experience, as well as the related reduced data and voice costs.

“We have adequately consulted relevant stakeholders and the public throughout this process and cannot do so to a point of regulatory paralysis,” Modimoeng said. Icasa is expected to auction IMT spectrum bands in the 700MHz, 800MHz, 2 600MHz and 3 500MHz bands for assignment to qualifying applicants. In a policy discussion document released in 2019, the National Treasury described the delay in the additional spectrum allocation as the single biggest constraint on the growth of the telecommunications sector and as a bottleneck for broader economic growth. Icasa temporarily released spectrum during lockdown last year which helped Vodacom and MTN launch their 5G networks. The release of spectrum not only helped operators to increase their network capacity, but it also improved their average network performance.

Mergence Investment Managers’ head of equity Peter Takaendesa yesterday said that the telecoms sector was one of the few net winners of the Covid-19 pandemic related shift in human behaviour as more people worked from home. Takaendesa said revenue continued to grow in 2020, despite an economy in deep recession and data price cuts of up to 40 percent on some packages following the Competition Commission’s agreements with the leading mobile operators.

“We expect industry growth to slow in 2021, due to the higher base set by Covid, but to remain relatively resilient as new spectrum allocations will provide capacity for further data revenue growth. If there is no major impact from new waves of Covid and vaccine rollouts continue as expected, we expect the more cyclical telcos to perform better as they recover from significant de-ratings 2020,” said Takaendesa.

MTN and Vodacom reduced their monthly bundles prices in April last year in response to the commission’s Data Service Market Inquiry, while partially state owned Telkom also slashed wholesale broadband access costs.

However, the share prices of companies in the telecoms sector performed very differently in 2020, despite the improved operational strength across all the key operators.

Takaendesa said Vodacom rose 12 percent and was the best performer in 2020 on a total return basis, as the market favoured its more defensive characteristics in a tough economic environment. “Unfortunately, MTN was down 15 percent, including dividends, and had come under pressure from its higher exposure to oil producing countries as well as the recent regulatory noises in Nigeria and as a result the shares are at the bottom of the pack so far,” Takaendesa said.

Takaendesa said highlights for the sector included Telkom mobile officially displacing Cell C to become South Africa’s third largest mobile operator.

Ralph Mupita took over from Rob Shuter as chief executive at MTN in September. MTN and Vodacom – South Africa’s two largest mobile operators – also appointed their first female chief financial officers since launching in the 1990s. Raisibe Morathi, former Nedbank chief financial officer since 2009, joined Vodacom in November while MTN last month named Tsholofelo Molefe as its new chief financial officer.

Molefe was Telkom’s chief financial officer since 2018.

BUSINESS REPORT

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