Telkom reaches settlement with South African regulator on spectrum auction

A shopper walks past a Telkom shop at a mall in Johannesburg. REUTERS/Siphiwe Sibeko

JOHANNESBURG, April 8 (Reuters) - South Africa's Telkom SA (TKGJ.J) has reached an out-of-court settlement with the country's telecoms regulator, ICASA, it said on Friday, bringing an end to the legal wrangling over the licensing of high-demand spectrum.

At issue is a radio frequency spectrum auction that South Africa completed on March 17. The auction collected 14.4 billion rand or nearly a billion dollars ($967.49 million) from the six bidders taking part, authorities said. But the assignment of the auction's results was uncertain given Telkom's court battle. read more

The litigation had cast doubt over the auction process that had been delayed for years due to similar lawsuits as the risk of the Independent Communications Authority of South Africa (ICASA) being ordered by the court to restart the auction again was high.

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The settlement is a victory for a sector that had waited 17 years for new spectrum to be released on a permanent basis to allow mobile operators to expand 4G capacity and roll out new 5G technology.

As part of the settlement, ICASA said in a separate statement it will commence with the licensing of the unsold 800 MHz spectrum band that was not sold in last month's auction and any other spectrum that is presently available for licensing.

In the licensing process of this spectrum, ICASA will consider the imbalances in this band and the impact of the outcome of the auction on competition in the mobile market, it added. ICASA intends to conclude this licensing process by the end of March 2023.

Furthermore, ICASA will conduct an inquiry into the existence of a secondary market for spectrum and the inquiry will include the assessment of whether there is a need for regulatory intervention, ICASA added.

The main contention points of Telkom, the country's third-biggest mobile operator, included the process ICASA planned to auction the spectrum, done in March, arguing the process favoured big mobile operators and was anti-competitive.

Telkom Group CEO Serame Taukobong said the settlement addresses the main complaints that led Telkom to take its case to court, adding it had agreed to withdraw the court application and that each party will pay its own legal costs.

Telkom added that the agreement gives challenger operators like itself further opportunity to acquire sub-1 GHz spectrum, crucial in providing better internet services in underserved and rural areas and better indoor coverage spectrum, to compete with established players.

($1 = 14.6561 rand)

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Reporting by Nqobile Dludla in Johannesburg and Radhika Anilkumar in Bengaluru Editing by Devika Syamnath and Matthew Lewis

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