Cell C seeks payment terms for R288m spectrum bill

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 01 Dec 2023
Cell C successfully bid R288 million for a 10MHz sliver of spectrum in the 3.5GHz band.
Cell C successfully bid R288 million for a 10MHz sliver of spectrum in the 3.5GHz band.

Mobile operator Cell C is looking to enter a payment arrangement with the Independent Communications Authority of South Africa (ICASA) over outstanding spectrum fees.

This was revealed by Jorge Mendes, CEO of Cell C, in an interview with ITWeb this week.

In March 2022, ICASA concluded the auction of the International Mobile Telecommunications spectrum – also known as high-demand radio frequency spectrum.

The telecoms regulator indicated the auction process beat financial projections, raising R14.4 billion for the national fiscus.

ICASA received spectrum applications from six mobile players: Cell C, Liquid Intelligent Technologies, MTN, Rain Networks, Telkom and Vodacom.

It has given the telcos a December deadline to settle all the outstanding spectrum fees.

During the auction, Cell C successfully bid R288 million for a 10MHz sliver of spectrum in the 3.5GHz band.

However, due to the financial distress the company is emerging from, it wants to negotiate with the regulator on payment terms.

“We have entered into a payment arrangement conversation with the regulator. It’s not finalised yet, but we do anticipate to get a positive outcome,” said Mendes.

“But one way or the other, whether we agree on a payment arrangement, or pay the amount in totality, we do want to use the spectrum. We have no intention of giving it back or not paying for it.

“Given the financial distress that we’ve come from, I think it’s commonly known that we are needing to get to a more specific and suitable payment arrangement.”

Cell C has roaming deals with Vodacom and MTN, and also utilises their spectrum. MTN and Vodacom paid R5.2 billion and R5.4 billion, respectively, for the spectrum they acquired.

“While we have our own spectrum assets, we will use our own spectrum for our own use, and we will continue having roaming arrangements with both players [MTN and Vodacom],” Mendes added.

He noted Cell C has a roaming arrangement with MTN for its prepaid and mobile virtual network operator (MVNO) customer base, and a roaming arrangement with Vodacom for its postpaid customer base.

“It’s critically important that we use the spectrum that we have, and in addition to that, we will be using their spectrum and network infrastructure. You have builders and infrastructure players, such as Vodacom and MTN, and buyers of technology services, like ourselves that buy roaming capability.

“That’s because of not being able to afford R10 billion a year to invest in building infrastructure for our network. But this is probably the best decision we made by going into a capex-light model by not investing in our own network, but focusing our capex into IT systems, billing and enhancing our digital capabilities to compete in an agile way.”

Looking ahead, Mendes said the first priority will be to stabilise and monetise the core – the prepaid and postpaid business.

“We have to make sure we have great customer experience. We haven’t done much on the B2B side, and we think that’s an opportunity. We would like to continue to accelerate the MVNO business. We also want to enter the enterprise business.”