S. African Minister Fights $1 Billion Internet Spectrum Sale

  • State says regulator decision made without government approval
  • MTN, Vodacom need spectrum to grow S. Africa internet access

South African Telecommunications Minister Siyabonga Cwele will take legal action to prevent the industry regulator from selling more than $1 billion of spectrum for high-speed broadband, potentially derailing plans to extend internet access across the country.

The Independent Communications Association of South Africa’s decision to invite companies such as MTN Group Ltd. and Vodacom Group Ltd. to apply for the auctioning of the spectrum was made “without consultation and prior notification to government,” the ministry said in a statement late on Monday. “A further concern is the haste with which Icasa is proceeding to dispose of the spectrum given that this spectrum will not be immediately available.”

The minister’s intervention could further postpone Icasa’s attempts to sell the spectrum after an earlier delay of about five years, partly caused by government deliberations over broadband policy. The move to attract bids from non-government internet providers is designed to help South Africa’s governing African National Congress deliver on a pledge to extend broadband access to every household by the end of this decade, improving connectivity in one of the world’s stragglers in internet access.

MTN shares declined as much as 2.1 percent in Johannesburg, which would be the steepest fall in almost three weeks, while Vodacom dropped 1 percent. That compared with a 0.4 percent gain on the FTSE/JSE Africa All Share Index.

‘Robust Statement’

“With the minister coming out with such a robust statement, I think Icasa’s plans to auction the spectrum in January next year will not be realized,” Dominic Cull, a telecommunications regulatory lawyer at Cape Town-based Ellipsis Regulatory Solutions, said on Tuesday. “Icasa has asserted some degree of independence, but they cannot ignore the policy maker. The two parties have been at loggerheads over what to do with the spectrum for over four years now.” 

The clash between government and regulator echoes a move by South Africa’s Department of Energy to investigate a bid by one of its own entities for oil and gas explorer Chevron Corp.’s assets in the country. The department said last month that an offer by the Strategic Fuel Fund, part of the Central Energy Fund Group that reports to the government, required consent from the minister that was “neither sought nor obtained.”

“The machinations of the ANC to control who is given the high-demand spectrum must stop,” said Marian Shinn, the shadow minister for telecommunications and postal services representing the opposition Democratic Alliance party. “It is time to let Icasa exercise its authority to act impartially in the best interest of South Africa,” she said.

ICASA proposed selling five blocks of spectrum at a reserve price of 3 billion rand ($210 million) each.

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