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South African spectrum auctions could freeze out major operators with new clause

The final draft of South Africa’s spectrum allocation process reportedly features a previously mooted clause relating to those who have come to be termed ‘historically disadvantaged individuals’, or HDIs.

The clause stipulates that the ownership of any parties bidding for the 2.6GHz and 3.5GHz spectrum bands must constitute at least 30% HDIs. These frequencies are up for auction later in the year, and will likely enable many South African operators to begin offering LTE services.

However, this criterion could prevent several of the country’s most prominent operators – among them Vodacom and MTN – from participating in the auctions; as a result, lesser-known operators could swoop in and purchase the much-sought after spectrum.

The clause first appeared last year in the regulation outlines drafted by the Independent Communications Authority of South Africa (ICASA); industry backlash prompted the body to drop the clause from its second draft later in the year.

However, the industry reaction to the clause’s unveiling can be viewed as positive, with many major operators pursuing what have become known as “empowerment” partners – one example being South African telecom giant MTN. In an attempt to generate interest among HDIs in purchasing shares, the operator has introduced a new share scheme aimed at promoting black economic empowerment.

The final draft guidelines are unlikely to change but could yet face legal hurdles; this would likely result in a delay to the spectrum auctions.

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