South Africa’s MTN, Telkom oppose government plan on shared telco network

By Nqobile Dludla

JOHANNESBURG (Reuters) – South African telecom companies MTN Group and Telkom said on Thursday they opposed a government plan to force operators to give up their broadband spectrum and share a national network.

Creating a single open-access network is at the heart of a government goal to roll out broadband access to 80 percent of the population by 2019, by encouraging operators to compete on services rather than the quality of the network.

In a policy paper published last month, the government proposed that spectrum be pooled and given to a new national wholesale open-access network operator – which would be owned by the government and the industry.

MTN, which dominates South Africa’s mobile phone market with Vodacom, said that while it agreed with the objective of giving more of the population access to broadband services it disagreed with aspects of the plan.

“In short the policy suggests that mobile operators will not get any more frequency spectrum and must hand back what they have,” MTN’s South African head, Mteto Nyati, said in an emailed response to questions from Reuters.

“Clearly such a scenario is untenable and unacceptable.”

Vodacom has yet to comment on the plan but Telkom, the fourth-biggest mobile operator which is 51 percent owned by the government and the state pension fund, said it opposed giving up spectrum already allocated although it favoured pooling spectrum not yet assigned.

“The fundamental problem is you have spent millions on the network and then have to return it. We need industry engagement on this issue,” Telkom’s Chief Commercial Officer Brian Armstrong said in a statement.

Only about 40 percent of South Africans currently have access to broadband and the government says leaving infrastructure development in the hands of operators risks concentrating it on affluent areas.

The telecom regulator, the Independent Communications Authority of South Africa (ICASA), has been at odds with the government over the allocation of broadband licences. The government went to court to block an auction of licences after ICASA unexpectedly announced the sale in July.

ICASA said the government’s latest plan would deter investment in the industry.

“I don’t think it’s well considered. You publish a paper that repels investment, which says those that have IMT spectrum must return it to a so-called pre-1994 monopoly of a group of operators instead of one,” Chief Executive Pakamile Pongwana said at a meeting of telecom industry executives on Thursday.

MTN’s Nyati said the plan would take the country backwards.

“It seems to be counterintuitive that South Africa has spent the past 22 years creating the regulatory environment for competition to flourish only to revert back to a monopoly,” he said. “MTN knows of no other country where such a structure has been implemented or is successful.”

($1 = 13.9289 rand)

(Additional reporting by Tiisetso Motsoeneng; Editing by Susan Fenton)