Telecommunications company Telkom and regulator the Independent Communications Authority of South Africa (ICASA) today reached an out-of-court settlement, bringing an end to the High Court litigation over the licensing of high-demand spectrum.
In a statement, Telkom says according to the settlement agreement, ICASA will commence with the licensing of the spectrum that remains unassigned in the auction by no later than 30 June, with the licensing process set to be concluded within ICASA’s current financial year.
It says ICASA has undertaken that it will have regard for the outcomes of the recently completed auction, in its licensing of the unassigned 800MHz.
Last month, ICASA raised R14.4 billion from the country’s historic spectrum auction process. During the auction, while Telkom was suing the regulator, the operator paid R1.5 billion for two chunks of 10MHz spectrum in the 800MHz band.
Late last month, the operator had said it will persist with its court application to ensure the licensing of spectrum promotes “effective competition in the mobile market in line with the objective of the Electronic Communications Act”.
The court case pitting the telecoms regulator against Telkom over the spectrum auction process was set to be heard later this month.
Telkom had argued it had serious difficulties with ICASA’s decision to again include sub-1GHz spectrum in the intended auction. The telco argued this band is currently the subject of a legal challenge brought by broadcaster Etv in the digital migration process.
While the digital migration process was set to be completed by 30 June, Etv has approached the courts to have the process halted.
Principal complaints addressed
According to Telkom Group CEO Serame Taukobong, the settlement addresses Telkom’s principal complaints – the restrictions in the spectrum bidding rules and the competitive effect of spectrum arrangements on the auction process.
The telco says the settlement agreement gives challenger operators like Telkom further opportunity to acquire sub-1GHz spectrum to compete with established players.
“Telkom has, in good faith, entered into a forward-looking settlement, providing ICASA the opportunity to resolve current market challenges identified by competition authorities, while allowing operators to focus on the business of providing superior service to their customers,” says Taukobong.
Telkom points out that ICASA has agreed to conduct a study on the impact of a possible secondary market of spectrum on competition and, if necessary, provide an adequate and enabling regulatory framework.
All parties to the litigation will bear their own legal costs, says Telkom.
“The settlement provides much-needed certainty to the sector,” Taukobong says.
In a separate statement, ICASA says the two parties have been having discussions to bring an end to the ongoing litigation due to be heard from 11 to 14 April.
In terms of the settlement agreed by the parties, ICASA says Telkom will not pursue the litigation any further.
The authority has undertaken that it will issue an information memorandum (IM) by no later than 30 June for the licensing of:
a) The unsold sub-1 GHz lot from the International Mobile Telecommunications (IMT) spectrum auction.
b) Any other IMT spectrum that is presently available for licensing except for the spectrum currently set-aside for the wireless open access network.
In the licensing process in terms of the aforesaid IM, the authority will consider the spectrum holdings emanating from the recently concluded auction, including the imbalances in the sub-1GHz bands, and the impact of the outcome of the auction on competition in the mobile market.
Secondary spectrum market
The authority intends to conclude the envisaged licensing process by the end of March 2023.
Furthermore, ICASA says it has undertaken to conduct an inquiry into the existence of a secondary market for spectrum.
This inquiry will consider the findings of the Mobile Broadband Services Inquiry, as well as the outcome of the recently concluded auction and any spectrum arrangements emanating therefrom.
The inquiry will include the assessment of whether there is a need for regulatory intervention.
ICASA chairperson Dr Keabetswe Modimoeng expresses his appreciation for the cordial manner in which Telkom conducted the engagements in pursuance of the settlement and is pleased the matter can now be concluded, says the regulator.
“We are, indeed, happy to have reached this stage with Telkom. This is indeed an epitome of the power of cordial dialogue where everyone has the same vision of building an inclusive digital society. We look forward to a new chapter of our public interest regulatory work with this litigation finally behind us,” says Modimoeng.