Telkom will continue to pursue its spectrum lawsuit against the country’s communications watchdog, the Independent Communications Authority of SA (ICASA).
“Whilst Telkom has been able to secure the much-needed sub 1 GHz in the spectrum auction, we were constrained in our ability to acquire the amount of spectrum that we need to compete effectively,” the company informed investors today.
“To secure its ability to compete effectively in the mobile market, Telkom persists with its court application to ensure that the licensing of spectrum promotes effective competition in the mobile market in line with the objective of the Electronic Communications Act.”
Telkom’s application is set down for hearing on 11 to 14 April 2022 and the outcome may impact the auction and its outcome.
Following the spectrum auction wherein Telkom obtained 20MHz of 800MHz and 22MHz of 3500MHz for R2.1 billion, ICASA confirmed the auction fee that is due within 30 working days.
The auction fee due is the full amount relating to 3500MHz and the proportional payment for 800MHz that is immediately available.
Telkom advised investors that the payment of R1.1 billion 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, said the company.
“Notwithstanding the financial impact, Telkom has adequate capacity on its balance sheet to fund the spectrum while maintaining sufficient headroom of its loan covenants,” said Telkom.
“The long-term strategic benefits of the spectrum acquisition outweigh the short-term financial impact.”
Since inception, Telkom Mobile has not owned sub 1 GHz spectrum.
“The 20MHz of 800MHz, once available, will enable more efficient network deployment, increased coverage and capacity on the mobility layer (FDD) resulting in improved user throughput and experience particularly in rural areas,” the company said.
“Telkom already leads the market with providing Fixed Wireless Access service. The acquisition of 22MHz of 3500MHz will enable us to advance an enhanced 5G position through combining our existing 28MHz of 3500MHz to achieve a total of 50MHz contiguous spectrum in this band.”
