Broadband: Telkom mulls suing Icasa

18 Aug 2016

Telkom, the fixed-line operator in which the government owns 39%, has joined the opposition to the Independent Communications Authority of SA (Icasa) broadband auction, saying it is considering legal action to stop the process.

In July, Icasa issued an invitation for applications for spectrum licences needed for the roll-out of highspeed mobile networks.

The process has been strongly criticised by small telecoms operators, and is being challenged by Telecommunications and Postal Services Minister Siyabonga Cwele, who has filed a court application for an interdict to stop the process and for it to be declared irrational and unlawful.

Cwele claims Icasa acted in contravention of state policy by opening the process just as the government was poised to set policy prescribing another process entirely. He has also said the regulator had failed to assess how competition within the mobile broadband market could be promoted through the licensing of spectrum.

Telkom spokeswoman Jacqui O'Sullivan said on Tuesday the company had "some fundamentally different views about the approach Icasa has adopted on the matter of spectrum."

"We are currently considering the legal merits of Icasa's approach and are exploring our own potential legal action with regard to the Icasa process."

The regulator has indicated its intention to oppose Cwele's case.

The case will halt the release of further spectrum for broadband services, seen as an important part of encouraging economic growth.

Icasa plans to auction the spectrum, which is bundled in four packages, for a minimum of R3bn each, with plans to complete the process in the first quarter of 2017. Companies such as Cell C and Smile Communications have accused the regulator of entrenching the big operators and discriminating against new entrants, given the high auction price.

Although Vodacom and MTN have welcomed the licensing process, they are "seeking clarity" on the minimum black equity requirement of 30%.

None of the large operators has black shareholding approaching this level.

The condition could result in the entry of new black investors into the market.

Black Lite Consulting MD Ajay Lalu said all operators had been aware of the 30% black economic empowerment requirement, which was also stipulated in the telecoms sector charter.

"Icasa is absolutely justified in wanting this requirement," he said.

"If telecoms companies want this valuable spectrum, which is a national asset, they have to sell equity to black investors," Lalu said.

Source: Business Day via I-Net Bridge

Source: I-Net Bridge

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