A top operator's lawsuit brews a telecom clash in South Africa

South Africa's largest mobile network operator, Vodacom, has filed a lawsuit against the Independent Communications Authority of South Africa (Icasa), the country's telecommunications regulator, over its approval of spectrum pooling moves involving MTN, Cell C, Rain and Liquid Intelligent Technologies.

The legal action claims Icasa unlawfully approved MTN's spectrum pooling without due public consultation or input from industry stakeholders. Vodacom complains that this "backdoor approval" has given MTN, the market's second-largest operator, an unfair advantage through the combination of spectrum blocks to enhance its network performance substantially beyond that of its competitors.

A spectrum is an essential bandwidth for wireless communication. For mobile network operators, the ability to pool it allows them to offer better connectivity services to mobile subscribers by upping bandwidth and doubling down on signal strength. It took Icasa 15 years to auction high-demand frequency; it ran the process in 2022, and operators paid heftily to buy blocks.

Vodacom's contention that MTN's activities in the fold constitute a huge change in control, one that should otherwise have been subjected to scrutiny by the Competition Commission (CompCom) to make sure it did not have adverse effects on competition in the market. This suit could set the stage for a cold war between MNOs and Icasa, one that might reshape the telecoms industry.

"This was all done in secret, without any notice to Vodacom (or the public), and without any opportunity afforded to comment and make representations on whether this ought to be allowed,” Vodacom is quoted to have stated in a filing to the Johannesburg High Court.

“After exhausting other options, Vodacom was left with little choice, but to approach the High Court for relief. It is our considered view that spectrum pooling is a material change of control event that has wide-ranging implications for both competitors and consumers.”

Telkom, which has been a longstanding critic of the block-sharing deals, may be motivated to reassert its grievances over the process. The carrier has, time and again, called for a comprehensive review of all radio frequency allocation agreements, arguing that they can entrench the dominance of the turf's largest operators.

There are wider implications. Almost all major network operators in the country are in deals falling within the grey areas. Vodacom, for one, has spectrum-sharing agreements with Cell C and Rain without pooling arrangements. In 2021, Cell C migrated its post-paid customers to Vodacom's network. That means its attack on unlawful practices can expose the telco's [own] deals to legal challenge.

The endgame sought is to interdict Icasa's allowance of spectrum pooling and inspire a judicial action to revoke approvals made so far. The lack of transparency not only undermines fair competition but also potentially sets the pace for future regulatory and legal actions.