The Independent Communications Authority of South Africa (Icasa) on Friday defended itself against “insinuations” that the ongoing mergers and acquisitions in the information and communications technology (ICT) industry were a result of the regulator’s delay in issuing high-demand spectrum.
This followed comments by telecommunications giant Vodacom CEO Shameel Joosub this week that its R7-billion deal to buy converged communications network operator Neotel was spurred in part by a need to access high-demand spectrum.
“Mobile operators are choking, we need spectrum,” he said at the group’s year-end results presentation on Monday, adding that the stalled spectrum policy necessitated companies coming up with “innovative ways” of moving forward.
Vodacom planned to leverage Neotel’s assigned spectrum of 2 X 12 MHz of 1800 MHz, 2 X 5 MHz of 800 MHz and 2 X 28 MHz of 3.5 GHz and enable the company to accelerate the roll-out of long-term evolution services, providing high-speed, high-quality wireless connectivity to a “greater proportion” of the South African population.
“We need to do something, so instead of government [giving the go-ahead], it is us making a plan,” Joosub added, admitting, however, that acquiring companies with access to the required spectrum was not a solution.
Icasa, in a statement on Friday, pointed out that, in 2011, the industry “partly opposed” – on the basis of a lack of policy direction – Icasa’s attempt to “open up” the licensing process for high-demand spectrum through the issue of an invitation to apply.
“This process was subsequently deferred pending the finalisation of the policy direction,” Icasa noted.
The Department of Communications had not released the long-awaited draft Policy Direction on Spectrum for Broadband, which would guide Icasa on the implementation of spectrum allocation and allow the licensing of the much-coveted 2.6 GHz and 800 MHz band spectrum.
Meanwhile, the authority acknowledged the ongoing reports of other merger and acquisition activity in the sector, including mobile operator MTN’s takeover of Telkom’s radio access network and Telkom’s R2.6-billion play for ICT service provider Business Connexion (BCX).
JSE-listed Telkom moved to buy BCX to expand its core business into the end-to-end ICT services sector to bounce back into profitability.
Earlier this year, MTN and Telkom entered network management services and reciprocal roaming agreements, which would see MTN take over financial and operational responsibility for the roll-out and operation of Telkom’s radio access network to ease the financial burden on the cash-strapped fixed-line operator.
Icasa, however, previously expressed its concern over the implications of South Africa’s “unprecedented” market consolidation and questioned the impact any consolidation of the market would have on the state of competition, the cost to communicate and bridging the digital divide.
The authority further pointed out that while consolidation may be a global phenomenon and was now anticipated in the market, the deals might require regulatory approval.
“Operators have been in discussions and some have informed the authority of their intentions, [but] none of these transactions have come before Icasa,” it said.
“The authority is aware of what is currently before the Competition Commission and, in accordance with our institutional arrangements with the commission, we will collaborate. However, that in no way negates the regulatory approvals required from Icasa,” the statement continued.
Icasa said it would make “a detailed comment” on the mergers as soon as it was presented with the substance and details of the deals between the companies.