MTN Sues South African Regulator Over 5G Spectrum Auction

MTN Sues South African Regulator Over 5G Spectrum Auction

MTN South Africa has filed a lawsuit against the country’s telecom regulator, the Independent Communication Authority of South Africa (Icasa), over the upcoming 5G spectrum auction, thus becoming the second company, after Telkom, to do so.

The Icasa’s spectrum auction plan classified MTN and Vodacom as tier-1 operators, which limits their chances of participating in the auction to zero.

The bone of contention is the 3.5GHz radio frequency spectrum band, which Icasa intends to make available to smaller telcos in South Africa, excluding MTN and Vodacom. The band is key to the delivery of 5G broadband services, but with the tier-1 classification, MTN and Vodacom can only bid for 4G spectrum auction.

MTN filed the suit on Wednesday in Pretoria, asking the court to declare Icasa’s process for awarding the 3.5GHz spectrum “unlawful” and have it “reviewed”, “corrected” or “set aside.”

The regulator had decided to implement an auction structure that creates two tiers of mobile operator. MTN and Vodacom are in tier 1 while Telkom, Liquid Telecom, Cell C, Rain, are in tier 2.

Icasa plans an opt-in auction round in which tier-1 operators will be barred from participating while those in tier-2 will be eligible to bid for 5G spectrum.

If the plan goes, MTN will lose out of 5G roll out in South Africa where it has invested so much in the fifth generation network infrastructure. The telco has rolled out 5G network across 100 towers, using the temporary spectrum government assigned it. But it needs more spectrum to attain further coverage.

MTN now wants clarity on the tiering classifications and the opt-in round structure through court. It said it has exhausted all other options for clarification as the regulator was not forthcoming with explanation.

The company said in its suit challenging the definitions used by the regulator to differentiate tier-1 and tier-2 operators, that they are “vague, arbitrary and unreasonable.”

Telkom already has access to the 3.5GHz band, 28MHz of it, according to Tech Central. Now MTN is worried that its rival could use the opt-in phase to secure the available spectrum, leaving it on 4G.

Icasa’s decision to place MTN and Vodacom on tier-1 is seen as a move to clip their chances to dominate the 5G roll out. The South African government owns 40% majority stake in Telkom, which is the third largest telco in the country, behind MTN and Vodacom.

MTN and Vodacom have more financial muscle to outbid the rest of the telcos in the spectrum auction, a situation the South African government appears keen to avoid since it will cripple Telkom’s chances in the 5G play field. There is limited 5G spectrum, and between the telcos, only MTN and Vodacom stand in the way of Telkom who is trailing them with 12 million subscribers, not up to half the 30 million subscribers in MTN customer-base.

Liquid Telecom is the only other telco among them with 56MHz access to the 3.5GHz band. The company is already building a wholesale 5G network, with Vodacom paying it for 5G roaming services for clients, according to Tech Central.

However, MTN said it does not want the lawsuit to delay the auction which is expected to take place in March, although there is a pending suit by Telkom seeking urgent temporary relief to stop the auction.

Telkom Group Executive for regulatory affairs and government relations, Siyabonga Mahlangu told Tech Central it’s suing Icasa because it felt the invitation to apply (ITAs) for spectrum and a planned wholesale open-access network contained fundamental flaws that could entrench the dominance of Vodacom and MTN.

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