Vodacom drags Icasa to court over 'secret' spectrum deals

Vodacom has filed an application at the high court in Pretoria seeking an urgent interdict to stop rival MTN from using “spectrum pooling” arrangements that it claims were approved unlawfully by communications regulator Icasa in June 2022.

In court papers seen by TechCentral, Vodacom claimed the arrangements, which included one between MTN and Cell C and another between MTN and Liquid Intelligent Technologies, have placed it – as well as Telkom and Rain – at a competitive disadvantage. It suggested this is the principal reason independent tests have shown MTN to have a superior network in recent years.

“What is at issue in this application is the approval by the first respondent (Icasa) of the ‘pooling’ of high-demand spectrum between MTN, Cell C and Liquid, in secret, in a manner contrary to the requirements of the Electronic Communications Act, and unlawful in other respects,” said Andrew Barendse, managing executive for regulatory affairs at Vodacom, in a founding affidavit lodged with the company’s court papers.

Spectrum pooling is a material change of control event that has wide-ranging implications

According to Barendse’s affidavit, Vodacom became suspicious of MTN’s advantage in network speed-test results after an analysis of several independent tests – including by Ookla, the owner of speedtest.net – led it to investigate its rival’s use of spectrum.

The “only plausible explanation”, given the two companies have similar site allocations and radio access network equipment, has to lie in spectrum utilisation, Barendse said.

Specifically, Vodacom concluded that MTN used spectrum beyond what it’s been lawfully licensed: by allegedly sharing spectrum belonging to Cell C and Liquid with its own to gain a material – and unfair – advantage in network quality.

Vodacom also accused Icasa and MTN of engaging in a “secretive” manner in concluding the spectrum arrangements. The Electronic Communications Act stipulates that a process of stakeholder engagement, which should have included other mobile operators and the public, be held before the arrangements were approved.

Guard bands

Vodacom has also questioned why the “spectrum pooling” allegedly disregarded restrictions on the use of spectrum “guard bands”. These are slivers of spectrum which Icasa keeps unallocated to ensure networks do not interfere with one another’s signals. Vodacom alleged that Icasa unlawfully approved the use of these guard bands by MTN.

Vodacom further said that the pooling of resources, in the manner MTN, Cell C and Liquid have allegedly done, is equivalent to a merger, meaning Icasa should have consulted the Competition Commission in its decision-making process, which it has been accused of failing to do.

Read: Capex per customer: how much MTN and Vodacom spend on you

In a statement on Friday, a Vodacom spokesman said: “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. As such, in terms of the Electronic Communications Act, Icasa should have followed a public consultation process prior to making a decision on the spectrum sharing applications of MTN, Cell C and Liquid. After exhausting other options, Vodacom was left with little choice but to approach the high court for relief.”

Icasa, the first respondent in Vodacom’s court papers, did not immediately respond to a request for comment from TechCentral.

A spokesman for Telkom said the company has “consistently asked Icasa, including as part of the 2022 spectrum auction preparation process, to review all spectrum sharing and pooling deals, as these have the potential to skew competition”.

MTN said it is “studying” Vodacom’s papers and consulting with external legal counsel to determine its “next course of action”. It declined to comment further. Liquid, the fifth respondent, and Rain, the seventh respondent, declined to comment. Comment was not immediately forthcoming from Cell C. – © 2024 NewsCentral Media