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Icasa spectrum auction nets more than R8 billion for the fiscus

South Africa’s digital economic infrastructure has been given a more than R8 billion boost after the telecoms regulator last week began auctioning licences for the high-demand radio frequency spectrum, despite ongoing litigation. Photo: Leon Nicholas

South Africa’s digital economic infrastructure has been given a more than R8 billion boost after the telecoms regulator last week began auctioning licences for the high-demand radio frequency spectrum, despite ongoing litigation. Photo: Leon Nicholas

Published Mar 14, 2022

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SOUTH Africa’s digital economic infrastructure has been given a more than R8 billion boost after the telecoms regulator last week began auctioning licences for the high-demand radio frequency spectrum, despite ongoing litigation.

The Independent Communications Authority of South Africa (Icasa) said on Friday that the long-awaited auctioning of licences for the state-controlled airwaves had surpassed its initial target.

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Icasa had initially planned to raise just R8bn through the auctioning of spectrum, formally known as the International Mobile Telecommunications (IMT) spectrum.

“Icasa is pleased to announce that the auction is proceeding very well and can confirm that we have gradually passed estimated R8 billion proceeds from the auction,” it said.

“Generally, spectrum auctions of this nature can take weeks to clear. However, the authority will announce the winning bids attained by each bidder at the end of the auction stage.”

The auction will proceed on Monday.

It is envisaged that the auctioning of spectrum will unlock the digital economy by drastically lowering the costs of communication, potentially bringing in more content creators, and bridge the digital divide between urban and rural areas.

The radio frequency spectrum in the 700 Megahertz (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.

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Tier-2 operators Cell C, Liquid Telecoms, Rain Networks and Telkom were eligible for the Opt-In auction, to achieve a minimum spectrum portfolio, which began on Tuesday.

Icasa raised just more than R2.65bn on Tuesday from Telkom and Rain, who successfully bid for spectrum in the 700 MHz, 800 MHz and 2 600 MHz bands.

The main stage of the auction, which included Tier-2 companies as well as MTN and Vodacom, started on Thursday and will continue on Monday.

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The government last week, through the Cabinet, said the licensing of high demand radio spectrum will improve the ability of mobile telecommunications operators to build robust telecommunications with greater penetration and reach.

“Great benefits of this long-awaited process include the reduction of the costs of data and voice communication,” Cabinet said.

“The spectrum is also expected to contribute to economic transformation in the various sectors and the proceeds of the auction will inject over R8bn into the national fiscus.”

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This was the first time Icasa was auctioning the spectrum to six eligible bidders as the process has been stuck in a bureaucratic and legislative maze for years.

Mobile operators have waited more than 15 years for Icasa to release spectrum licences.

Icasa’s attempts to auction spectrum have been hindered by several legal challenges, and a case lodged by Telkom against the process is set for April 11 to 14. It is not yet clear if the outcome of the case would impact the results of the auction.

In January, Telkom filed an application asking the Gauteng High Court to review and set aside the invitation to apply spectrum bands and licence obligations via an auction.

Telkom’s case has pitted it against rivals MTN Group and Vodacom, as well as Communications Minister Khumbudzo Ntshavheni, who have all filed papers to oppose the court bid to halt a spectrum auction.

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