The telecommunication sector is facing a great deal of uncertainty over the future direction of broad based black economic empowerment (BBBEE) rules for the ICT sector.
This is reflected in statements made by the largest mobile phone network operator in the country, Vodacom.
The uncertainty comes amidst the introduction of news and tougher BBBEE codes of good practice which kicked in at the beginning of May and threatens to cause massive BBBEE downgrades.
Corporations in the telecoms space are worried because the new direction of BBBEE rules will come to impact on the process of spectrum allocation. Some analysts have argued that some corporations will have to do follow up BBBEE deals to pass the empowerment test in additional spectrum allocation.
In his 2014/15 annual report, Vodacom chairperson Peter Moyo tackles both the spectrum and BBBEE issues.
He says “the delay in allocating additional spectrum is becoming a serious constraint to our growth strategies.” He added that “The key policy frameworks that will affect the allocation of additional spectrum in South Africa are still being finalised. The Electronic Communications Act currently prescribes 30% direct Black Economic Empowerment (‘BEE’) ownership as the prequalification criterion for spectrum or licensing applications.”
“Recently published spectrum regulations indicate that pre-qualification criteria are either 30% BEE ownership or Level 4 or higher BBBEE status. However, until the process of harmonisation has been completed between the Department of Trade and Industry’s revised BBBEE Codes and the ICT Sector Charter, it is unclear what the exact requirements will be and what the implications are for Vodacom in obtaining licences for additional spectrum.”
Back to spectrum Moyo added that the delay in allocating additional spectrum is “hampering our ability to continue meeting the rising demand for data services and to roll out LTE/4G optimally.
“Additional spectrum would also allow us to alleviate the current strain on voice services due to the interim measure of re-farming existing spectrum to support data services. As such, the delay is impeding the advance towards the South African Government’s 2020 goal of broadband for all as part of the National Development Plan.”