On 26 July 2019, the Minister of Communications published the Policy on High Demand Spectrum and Policy Direction on Licensing of a Wireless Open Access Network ("WOAN Policy") to tackle the spectrum scarcity of the country. Pursuant to the WOAN Policy, the Independent Communications Authority of South Africa ("ICASA") released a tender for high-demand spectrum bands, needed for high-speed broadband and 5G during 2021, for allocation to telecommunications operators to provide national broadband wireless access services to all South Africans. The allocation of the spectrum marked the first time in 17 years that a spectrum has been released permanently in the country.
Overview of the auction process
On 10 December 2021, ICASA invited telecommunications operators to bid for the licensing of the high-demand spectrum in order to adequately allocate the spectrum. The invitation intended to enable the achievement of some of the country's key policy objectives, such as universal and cheap internet access for all South Africans. Telecommunications providers had to submit their applications prior to the auction in order to pass the pre-qualification step of the licensing process. Cell C, Liquid Telecoms, MTN, Rain Networks, Telkom, and Vodacom were among the companies who qualified to bid in the auction.
The auction was conducted in two parts, the opt-in auction, and the main stage auction. The opt-in auction took place on 08 March 2022 and featured a single bidding round in which eligible bidders could make their bids in person in order to attain a minimum spectrum portfolio (MSP) and only two bidders would be allocated the spectrum. Cell C, Liquid Telecoms, Rain Networks, and Telkom were the four qualifying bidders, and Rain and Telkom were the successful bidders. The main stage auction, which took place online on 10 March 2022, consisted of all six qualified bidders and had multiple bidding rounds and each of the qualified bidders acquired various spectrum lots.
The outcome of the auction and allocation of the spectrum
After the conclusion of the auction, on 17 March 2022, ICASA conducted a frequency assignment stage to assign the successful bidders with the lots they won in both the opt-in auction and the main stage auction. As seen from the tables below, ICASA collected R14.4 billion from the spectrum auction which will contribute to the national fiscus. All but one spectrum lot of 2x10MHz in the IMT800 Band was not allocated and will be licensed by ICASA.
According to ICASA, the successful bidders are now obligated to fulfil certain social responsibilities and obligations, such as connecting 18 520 public schools, 5 731 public health facilities, 8 241 offices of traditional authorities, and 1 154 police stations over the next three years. The successful allocation of the spectrum also means a reduction in data prices and voice communication prices, which would encourage retail-market competition between the telecommunications operators.
Spectrum Lots Acquired in Opt-in Auction Stage and Associated Revenue
BIDDER IMT700 IMT800 IMT2600 IMT3500 TOTAL (ZAR)
Telkom 20 1 504 815 407.10
Rain 20 10 1 151 274 105.50
Subtotal Revenue 2 656 089 512.60
Spectrum Lots Acquired in Main Auction Stage and Associated Revenue
Bidder IMT700 IMT800 IMT2600 IMT3500 TOTAL (ZAR)
Telkom 22 608 800 000.00
Liquid Telecom 4 111 000 000.00
Cell C 10 288 200 000.00
Rain 10 280 100 000.00
MTN 20 40 40 5 152 100 000.00
Vodacom 20 80 10 5 381 600 000.00
Unsold 20
Sub-total Revenue 11 821 800 000.00
Total Spectrum Lots Acquired per Bidder and Associated Financial Commitment
Bidder IMT700 IMT800 IMT2600 IMT3500 TOTAL (ZAR)
Telkom 20 22 2 113 615 407.10
Liquid Telecom 4 111 000 000.00
Cell C 10 288 200 000.00
Rain 20 20 1 431 374 105.50
MTN 20 40 40 5 152 100 000.00
Vodacom 20 80 10 5 381 600 000.00
Unsold 20
Sub-total Revenue 14 477 889 512.60
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Read the original article at CMS.