Mobile operator Cell C has apparently failed to pay for spectrum it bought from the Independent Communications Authority of South Africa (Icasa) in March last year.
Business Times understands from several sources that the third-largest mobile operator failed to cough up for the 10MHz of spectrum in the 3.5GHz bands that it purchased for R288m.
The director-general of the department of communications & digital technologies, Nonkqubela Jordan-Dyani, told Business Times her department had “heard” that Cell C was yet to pay for the spectrum.
“Because Icasa is an independent regulator, they are the ones who facilitated the spectrum auction… From a department perspective, Cell C has not approached us… That’s why I said we ‘heard’ [it has not paid]. Because they haven’t approached us, we wouldn’t know the nitty-gritty of what is happening there.”
Both Cell C and Icasa failed to respond to requests for comment.
Jordan-Dyani said the department was more concerned with maintaining an agile and competitive telecom market.
“If you have a diverse [number] of players you are able to achieve that. But most importantly we are more concerned about the consumer. We want to make sure there is most affordable and cheapest service available and we also want to make sure that it is reliable and available.”
But most importantly we are more concerned about the consumer. We want to make sure there is most affordable and cheapest service available and we also want to make sure that it is reliable and available
— DG Nonkqubela Jordan-Dyani
At the time the auction raised R14.4bn for the fiscus, with R10.5bn of that coming from Vodacom and MTN. Telkom spent R2.1bn and Rain R1.4bn.
Telecom operators will use the spectrum to roll out a superfast 5G network.
It is not clear what the immediate consequences of failure to pay for spectrum will be, but those with insider knowledge said it was likely the operator would lose its allocation.
Cell C, which has around 13-million subscribers and which is 49.5% owned by Blue Label Telecoms, has already exited the cellphone network infrastructure market. Its prepaid customers are roaming on MTN while the contract subscribers are on Vodacom. This move is expected to save Cell C billions of rand in infrastructure-related costs.
In June the company said moving its customers to the other networks meant “they will benefit from expanded national coverage, better quality connection, fewer dropped calls and generally a more stable network during load-shedding, as the partner network is investing in backup power”.
It said it had expanded its network access close to threefold in less than three years, from 5,500 towers to 14,000.
It had deactivated its own physical tower and radio access network (RAN) and “seamlessly” migrated prepaid and mobile virtual network operator customers. Cell C used its own spectrum and was still fully in control of the customer experience, it said.
Blue Label said in an annual report published on Friday that Cell C was now a leaner, more agile and fit-for-purpose entity. Following the recapitalisation of the debt structure, it was well-positioned for growth “that will enhance shareholder value”.
Last year, the struggling network operator completed a R7.3bn debt-restructuring programme that Blue Label said “has achieved the deleveraging of its balance sheet, providing it with liquidity with which to operate and enhance its businesses and to position itself to achieve long-term success for the benefit of its customers, employees, creditors, shareholders and other stakeholders”.
Blue Label, which for years has been dragged down by Cell C’s financial woes, plans to take control of the company.
Highlighting some potential risks and opportunities, Blue Label flagged the failure of Cell C’s strategy and execution of its business plan. This “would not only negatively impact the investment therein, but would also have a compounded effect on the Blue Label Group, in that a significant portion of its profitability stems from its trading relationship with Cell C”.
Cell C’s strategic move towards network sharing had eliminated network deficits, enabled efficient use of infrastructure, reduced costs and promoted healthy competition in the telecom sector, Blue Label said.
“By owning the customer experience and shifting focus towards innovation, Cell C is better positioned to evolve into a truly customer-centric organisation and continue to play a crucial role in shaping a seamless digital future for all,” it said.
A few months ago, Jorge Mendes, a former senior executive at Vodacom, was appointed as CEO of Cell C.
— Additional reporting by Sibongakonke Shoba
