Despite winning R2bn in spectrum, Telkom still wants auction to be declared invalid | Fin24

After spending more than R2 billion to buy spectrum at auction this month, Telkom confirmed that it is still pushing ahead with legal action to declare the entire auction invalid.

The auction raised R14.4 billion – R6 billion more than initially expected – with MTN and Vodacom each paying more than R5 billion for spectrum.

Telkom obtained 20MHz of 800MHz and 22MHz of 3500MHz for R2.1 billion. This is the first time that Telkom will own spectrum below 1 GHz, which will help it to increase coverage and boost connection quality, particularly in rural areas. It will also bolster its 5G service.

But Telkom still wants the auction to be declared invalid. The company, which is partly owned by the state, argues the design of the auction process issued by Icasa will entrench an uneven playing field in the telecoms sector.

“Whilst Telkom has been able to secure the much-needed sub 1 GHz in the spectrum auction, we were constrained in our ability to acquire the amount of spectrum that we need to compete effectively. To secure its ability to compete effectively in the mobile market, Telkom persists with its court application to ensure that the licensing of spectrum promotes effective competition in the mobile market in line with the objective of the Electronic Communications Act,” Telkom said on Monday.

The court hearing will start on 11 April.

The company added that the amount it is spending on spectrum will impact its debt levels and free cash flow, which so far this year is negative territory, and “tracking below its expectations”. Still, the company said it will honour its loan payments.

“The long-term strategic benefits of the spectrum acquisition outweigh the short-term financial impact,” Telkom added.