MTN SA Splurges R5.2 billion For Much-Needed Spectrum

MTN
MTN

MTN Group announced today that MTN SA has secured high-demand-spectrum to support its 4G and 5G expansion drive.

During the main phase of the auction, which started on 10 March 2022 and finished
after 58 rounds of bidding, MTN SA acquired a total of 100MHz across the 800MHz,
2 600MHz and 3 500MHz frequency bands.

The company said it will pay a total of R5.2 billion for the spectrum. This compares favourably with global benchmark averages of approximately $0.083MHz-POP – according to Coleago Consulting – for spectrum in similar auctions, said MTN.

MTN SA secured the following spectrum bands in the SMRA:

  • 1. 2 x 10MHz of 800MHz at a price of R2.9 billion ($195.5 million)
  • 2. 4 x 10MHz of 2 600MHz at a price of R1.1 billion ($72.8 million)
  • 3. 4 x 10MHz of 3 500 MHz at a price of R1.1 billion ($75.1 million)

This is the first time in approximately 17 years that spectrum has been released on a
permanent basis in South Africa and increases MTN SA’s total permanent spectrum
holdings from 76MHz to 176MHz.

The spectrum has been allotted for a 20-year period and on a technology-neutral basis.

“The release of the high-demand spectrum is a significant step forward for South Africa
in the implementation of the key structural reforms needed to drive economic growth.
We commend ICASA and the government of South Africa for the bold and transformational decision to proceed with this auction,” said MTN Group CEO Ralph Mupita.

“Securing this high-demand spectrum is critical in positioning MTN SA, the second-largest operation in the MTN Group, for sustained and profitable growth into the future. We have secured an optimal mix of low-band and mid-band frequencies for MTN SA that will support the data traffic we will carry for 4G and 5G services.

“In line with our disciplined capital allocation framework, which prioritizes investment in growth, we have built up the financial flexibility to be able to fund MTN SA’s spectrum
acquisition through cash and liquidity resources at MTN Group. We expect our holding
company leverage to remain within our guidance targets, following the acquisition of
this spectrum. We have secured this spectrum at a cost that is value accretive for our
providers of capital, when you compare against global benchmarks.”

Speaking on the auction, MTN SA CEO, Charles Molapisi said “this is a significant
milestone and achievement, not only for MTN SA and the telecommunication industry
at large but also for South Africa’s digital future. Spectrum is the lifeblood of our
industry and is key to reliable and extensive connectivity for our customers across the
country”

“Our multibillion-rand investment into this much needed spectrum is also an
important injection of cash into the national fiscus. In anticipation of the spectrum
allocation, we had undertaken a modernisation of our network to ensure that we
would be ready to leverage this spectrum to the connectivity benefit of South Africans
as quickly as possible.”

MTN SA will use the spectrum to expand 4G and 5G connectivity, as well as the capacity, on South Africa’s best network while also further enhancing rural, peri-urban, and urban network coverage. The spectrum allocation will also allow for greater value for customers, supporting MTN’s consistent push in recent years to lower the cost to communicate.

Molapisi pointed to the use of temporary spectrum as a case study of how MTN SA
would use its allocated spectrum.

ICASA’s allocation of temporary spectrum during the national state of disaster gave MTN SA extra network capacity to provide more than four million people access to free health and education websites each month.

MTN SA will continue to make this provision with the permanent award of spectrum
and will expand access to include additional public service websites, as per the
conditions set out for this auction.

The temporary spectrum also allowed the operator to reach deeper into small towns
and particularly rural communities that were previously underserviced due to the lack
of required spectrum. Currently, MTN SA has approximately 96% of the country
covered by its 4G network and the spectrum allocation promises even greater reach,
coverage and speeds.

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