The power of the Independent Communications Authority of South Africa (Icasa) to process the transfer of control of spectrum, electronic communication services (ECS) and electronic communication networks services (ECNS) licences has been called into question.

This emerged during a two-day public hearing into Vodacom’s application for transfer of control of Neotel’s ECNS and ECS licences, as well as the radio frequency spectrum licences, as part of a R7-billion acquisition process.

State-owned telecommunications provider Telkom stated that there were no regulations influencing the process of transfer of control, leaving a regulatory vacuum, with Internet Service Providers’ Association (Ispa) regulatory adviser Dominic Cull calling into question the procedures surrounding the proposed transfer of control.

“The applicable legal framework for the transfer of control of service licences and radio frequency spectrum licences is fraught with difficulty,” Cull said at the hearings, speaking on behalf of the Wireless Access Providers’ Association (Wapa) and Ispa.

In light of this, Ispa, Wapa and Telkom suggested that Icasa halt the current process of reviewing the proposed acquisition pending the promulgation of the “requisite regulations or suitable amendment” of the existing transfer of ownership and control regulations.

Wapa and Ispa said Icasa needed to obtain “expert advice” on the “correct procedure” to be followed by Neotel and Vodacom as they pursued approvals for the proposed transaction.

While amendments to the Electronic Communications Act (ECA) that came into effect on May 21 outlined aspects of the transfer of licences and empowered Icasa to do so, regulations prescribing the manner in which an individual licence or its control could be transferred had yet to be promulgated.

“It is common cause that there are no regulations governing the transfer of control of spectrum licences. The latter situation exists because the authority [Icasa] is yet to promulgate regulations in support of the amended Section 31 of the ECA,” Telkom explained.

Cull noted that this oversight raised critical procedural issues, particularly as Vodacom and Neotel applied for the transfer of control of Neotel’s licences through the outdated Ownership and Control regulations, tabled in 2003, which had “restricted practical application and dubious legal relevance”.

Telkom noted that, although the 2003 regulations were still in force, they did not regulate the transfer of ownership or control of an individual licence as defined in the ECA.

The fixed-line operator noted that the regulatory framework that Vodacom’s buyout of Neotel would be evaluated on – and the necessary permissions granted – appeared to be “incomplete”, adding that the consideration of the proposed transaction in the absence of a regulatory framework would be “potentially problematic”.

“We submit that the regulations governing the transfer of control of individual licences may be necessary within the meaning of Section 4(1)(b) of the ECA and, without which, it is arguable that there would be uncertainty on the process to be followed and the factors that must be taken into account by the authority in reaching its decision,” Telkom stated.

“Should Icasa promulgate the necessary regulations, [it] will ensure certainty and provide a more complete framework to regulate all [future] transactions of this nature,” the telecommunications provider concluded.