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Vodacom eyes smooth timelines for next spectrum auction

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 22 Nov 2023
ICASA has set its sights on 2024 for the second spectrum auction.
ICASA has set its sights on 2024 for the second spectrum auction.

As the Independent Communications Authority of South Africa (ICASA) prepares to conduct its next spectrum auction as early as next year, Vodacom hopes the telecoms regulator will stick to its intended timelines.

This was the word from the telephony group’s CTO, Dejan Kastelic,speaking last week during a media roundtable hosted on the sidelines of Africa Tech Festival 2023 in Cape Town.

ICASA has earmarked 2024 to complete the next phase of the International Mobile Telecommunications (IMT) Radio Frequency Spectrum licensing.

The licensing process is availing spectrum resources on the following identified IMT spectrum bands: IMT750, IMT800, IMT1500, IMT2300, IMT3300 and IMT3500.

According to Kastelic, after people, spectrum is the telecoms giant’s key asset. “In six out of the eight markets where we operate, we have the spectrum advantage and it’s our key pillar. We’re super-excited about the upcoming auction in South Africa – hopefully, it happens as per plan.

“Hopefully, it delivers that value and benefit we’re searching for, which can eventually be translated back to the customer.

“The more spectrum we have, the more we can actually utilise our existing sites with high capacity, and that means lower costs to operate and lower costs to manage.”

He explained that in all of the countries where Vodacom operates, the focus is on two narratives: cost to build and cost to operate. “This means we are relooking how we build the sites, the needs of those sites, is there a cheaper way of doing it or building it, and what kind of technologies are we putting there.

“It’s also important as to why we want to drive that device migration from 2G and 3G directly to 4G. This will drive that efficiency in terms of cost to build and cost to operate, which can later on be translated back to the customers, in terms of cost per 1GB or the cost of the offerings.”

Vodacom Group CTO Dejan Kastelic.
Vodacom Group CTO Dejan Kastelic.

Last March, ICASA concludedthe auction of the IMT spectrum – also known as high-demand radio frequency spectrum – receiving spectrum applications from six mobile players: Cell C, Liquid Intelligent Technologies, MTN, Rain Networks, Telkom and Vodacom.

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

In its interim financial results for the six months ended 30 September, Vodacom reveals it secured 110MHz of high-demand spectrum, including 2 x 10MHz in the 700MHz spectrum band, 80MHz in the 2 600MHz spectrum band, and 10MHz in the 3 500MHz spectrum band, for an amount of R5.4 billion.

The spectrum licence was effective on 1 July 2022, and Vodacom paid R3.2 billion in the first half of the prior financial year for this spectrum. According to the telco, the outstanding amount was paid on 30 October 2023.

This, after the telecoms regulator gave successful bidders of the low 700MHz and 800MHz spectrum frequency bands a deadline of the end of October to pay outstanding amounts.

These frequency bands, occupied by the analogue TV signals, were recently made available following phase one of the country’s digital migration process, beginning with all the broadcasters from any band above 694MHz being migrated.

At the media roundtable last week, Ryan van den Bergh, managing executive:technology strategy, architecture, spectrum and assurance at Vodacom Group, noted that prior to last year’s spectrum auction, telcos hadn’t received spectrum in 15 years, especially the lower frequency bands.

Van den Bergh also highlighted that the spectrum secured in the 700MHz band from last year’s auction is critical to Vodacom’s 5G ambitions.

“Those lower frequency bands are critical for us to improve our overarching coverage. Remember, we’ve got to deal with a mix of 2G, 3G, 4G and 5G, which is very different, for example, if you’re in Europe, where they’ve moved on to the modern technologies.

“We have to re-farm our spectrum and make sure we can cater for everything simultaneously, so we need the lower frequency bands to start providing more 4G coverage, and eventually even 5G on those lower bands with a wider coverage area.”

Kastelic added that the biggest cost when looking at the network is the site, either building it or entering into co-location of that site. “The more spectrum I have, the more capacity I can serve per site.

“The less spectrum I have, I need to put more sites into the network – densify the network. That’s why spectrum is super-important for us in terms of getting that capacity on site, which can drive the cost-efficiency that we can then pass on to the customer.”

According to Kastelic, Vodacom is already witnessing the benefits from last year’s auction.

Meanwhile, Telkom yesterday revealed it asked ICASA to postpone the next spectrum auction to 2025.The mobile operator said ICASA has, to date, not responded to its request.

ICASA had not responded to ITWeb’s request for comment by the time of publication.