President Cyril Ramaphosa said Communications Minister Stella Ndabeni-Abrahams “will shortly be issuing policy direction to Icasa. Photo: Phando Jikelo/African News Agency(ANA)
JOHANNESBURG – The highly capital-intensive telecoms industry received welcome relief in last week’s State of the Nation Address, with the government promising to accelerate the release of radio frequency spectrum, which is seen as the lifeblood of the sector. The move was expected to reduce data prices and open up the market for smaller players.

President Cyril Ramaphosa said Communications Minister Stella Ndabeni-Abrahams “will shortly be issuing policy direction to the Independent Communications Authority of SA for the licensing of the high-demand radio frequency spectrum”.

Ofentse Dazela, a director of pricing research at Africa Analysis, said the government had recognised the potential of telecoms sector in its efforts to reinvigorate the economy and the role this sector continued to play in attracting foreign investment.

“By allocating spectrum, the government hopes the move will not only lead to lower-priced data products in the local market, but this will also put the country in the envisaged path of digital economy and to to also unlock opportunities for smaller businesses that hoping to participate in this sector,” Dazela said.

“The allocation of high-demand spectrum will also alleviate capital expenditure (capex) burdening existing players in the mobile market as it will remove the need for operators to build masts in close proximity due to spectrum scarcity.”

Through the Wireless Open Access Network smaller businesses stand to access the costly spectrum resource, which is deemed to be one of the greatest obstacles that is inhibiting the greater participation of historically disadvantaged individuals in this sector.

Africa Analysis in a capex review of South Africa’s big networks showed combined expenditure amounted to R100billion in the three years from 2016 to lat year.

The study found that last year three telecoms operators, MTN, Telkom and Vodacom, accounted for 78.6percent of the total annual capex and that MTN, with 32.6percent capex market share, continued to be the largest investor. MTN SA chief executive Godfrey Motsa last month said the imminent release of much-needed spectrum was an important milestone in South Africa’s telecoms history and was reason for optimism.

“We are greatly encouraged by the steps being taken by both government and our regulator to progress the release of spectrum. More spectrum will be an important contributor to helping further drive down the cost to communicate and by slashing our out-of-bundle pricing,” Motsa had said.

Business Unity SA president Sipho Pityana said the urgency government had placed on the release of spectrum was good for businesses.

“Of significance is accelerating the release of high-speed spectrum, which will aid efforts to ready South Africa for the 4th Industrial Revolution, as well as the president’s emphasis on creating a conducive environment for business (to) participate in the economy.”