South Africa’s Icasa raises US$961m in high-demand radio spectrum auction

SOUTH AFRICA – The Independent Communications Authority of South Africa (Icasa) has announced that it had raised R14.4 billion (US$961.33m) from the high-demand radio frequency spectrum auction, which would go to the national fiscus.

The auction involved six qualified bidders: Cell C, Liquid Intelligent Technologies, MTN, Rain Networks, Telkom and Vodacom.

Icasa confirmed in a statement yesterday that there was one unsold spectrum lot of 2x10MHz in the IMT800 Band, which would still be licensed by the authority in future.

Mobile giant Vodacom paid R5.4 billion (US$360.50m), MTN secured the high-demand radio for R5.15 billion (US$343.81m), Telkom paid R2.1 billion (US$140.19m), while mobile operator Rain paid R1.4 billion (US$93.46m).

Cell C forked out R288.2 million (US$19.24m), with Liquid Telecom paying R111 million (US$7.41m).

“This was our inaugural radio frequency spectrum auction, and we are really grateful to have reached this stage without any hassles and challenges from the first day of the actual auction to date. This shows South Africa’s capability as an investment-friendly destination,” Icasa chairperson Dr Keabetswe Modimoeng said.

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.

MTN SA said in a statement that this was the first time in 17 years that spectrum had been released on a permanent basis in South Africa and increased the firm’s total permanent spectrum holdings from 76MHz to 176MHz.

“Securing this high-demand spectrum is critical in positioning MTN SA, the second largest operation in the MTN Group, for sustained and profitable growth into the future,” MTN Group President and chief executive Ralph Mupita said.

The spectrum had been allotted for a 20-year period and on a technology-neutral basis.

MTN SA said it would use the spectrum to expand 4G and 5G connectivity, as well as the capacity, on its network while also further enhancing rural, peri-urban, and urban network coverage.

MTN SA said it had 96 percent of the country covered by its 4G network and the spectrum allocation promises even greater reach, coverage and speeds.

During the main phase of the auction, that started on March 10, 2022 and finished after 58 rounds of bidding, MTN SA acquired a total of 100MHz across the 800MHz, 2 600MHz and 3 500MHz frequency bands. The firm said the price it paid compared favourably with global benchmark averages.

“In line with our disciplined capital allocation framework, which prioritises investment in growth, we have built up the financial flexibility to be able to fund MTN SA’s spectrum acquisition through cash and liquidity resources at MTN Group,” Mupita said.

“We expect our holding company leverage to remain within our guidance targets, following the acquisition of this spectrum. We have secured this spectrum at a cost that is value accretive for our providers of capital, when you compare against global benchmarks.”

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