Telkom will persist with its court application to ensure the licensing of spectrum promotes “effective competition in the mobile market in line with the objective of the Electronic Communications Act”.
The company updated the market on its spectrum plans today. It says while Telkom has been able to secure much-needed sub-1GHz in the spectrum auction, it’s constrained in its ability to acquire the amount of spectrum it needs to compete effectively.
Telkom says it will therefore continue with its court action against the regulator, and its application is set down for hearing from 11 to 14 April.
Telkom has been at odds with the regulator, the Independent Communications of SA’s roadmap to license the spectrum.
The telephony group lodged an application asking the Gauteng High Court to review and set aside the licensing of high-demand spectrum as published.
However, later on in January, Telkom asked the courts to remove part A of its application from the roll and expedite part B.
Part A requested the court to urgently suspend the licensing process, while the court deliberates on part B of Telkom’s application, which focuses on the merits of its arguments against the licensing process.
In the market update today, Telkom says following the just concluded spectrum auction, the company obtained 20MHz of 800MHz and 22MHz of 3 500MHz for R2.1 billion, which is due within 30 working days.
“The auction fee due is the full amount relating to 3 500MHz and the proportional payment for 800MHz that is immediately available,” says Telkom, adding the regulator communicated an update on the full availability of the 800MHz, after 1 July.
Also, in the same update, Telkom advised shareholders that the payment of R1.1 billion for spectrum is expected to be made in the current financial year, impacting the current year debt level, capex spend and free cash flow (FCF).
“Telkom year-to-date FCF is in negative territory, tracking below its expectations. Notwithstanding the financial impact, Telkom has adequate capacity on its balance sheet to fund the spectrum, while maintaining sufficient headroom of its loan covenants,” it says.
Telkom, however, notes the long-term strategic benefits of the spectrum acquisition outweigh the short-term financial impact.
“Since inception, Telkom Mobile has not owned sub-1GHz spectrum. The 20MHz of 800MHz, once available, will enable more efficient network deployment, increased coverage and capacity on the mobility layer, resulting in improved user throughput and experience, particularly in rural areas.
“Telkom already leads the market with providing fixed wireless access service. The acquisition of 22MHz of 3 500MHz will enable us to advance an enhanced 5G position through combining our existing 28MHz of 3 500MHz to achieve a total of 50MHz contiguous spectrum in this band.”
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