Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

Shares in SA’s telecommunications companies rose on Friday after President Cyril Ramaphosa said the long-delayed spectrum licensing process will start within weeks.

Mobile operators have said for years that their limited access to radio waves, or spectrum, is pushing up costs for consumers and themselves, since they need to counter the shortage by building more towers.

Spectrum allocations were initially halted because the department of telecommunications and postal services disagreed with the Independent Communications Authority of SA (Icasa) on allocation methods.

Ramaphosa said in his state of the nation address (sona)  on Thursday night that to help reduce SA’s “excessively high” data costs, communications minister Stella Ndabeni-Abrahams would issue a policy direction to Icasa to get the ball rolling “within the next month”.

Ndabeni-Abrahams took over as communications minister in November 2018. The month before, then-minister of telecommunications and postal services Siyabonga Cwele said an auction of radio frequencies for 4G services would be done by April 2019.

MTN’s shares, which dipped below R70 in September 2018 because of its regulatory troubles in Nigeria, were 1.4% up at R109.33 shortly after noon on Friday.

Telkom was up 1.5% at R96.71, extending its gains for the year to date to 52.8%, while Cell C-investor Blue Label Telecoms was 0.2% higher at R4.85.

Vodacom, which said earlier in the day it would sell its enterprise operations in five African markets, was 0.4% down at R125.12.

“Further news on initiating the spectrum allocation process is positive for the telecoms sector,” said Mergence Investment Managers portfolio manager Peter Takaendesa.

Telecoms operators were also benefiting from a renewed global hunt for yield amid expectations of rate cuts in the US and other markets, Takaendesa said. Network operators tend to be cash-generative with relatively high dividend pay-out ratios.

“Unfortunately, gaining full access to the relevant spectrum bands is likely to take time, hence the big two mobile operators continue to enter into roaming arrangements to bridge that gap,” he said. “The timing of the required data price cuts compared to the benefit of lower-cost broadband spectrum access is likely to prove challenging for the mobile operators over the near term.”

Ramaphosa said on Thursday that the spectrum allocation process would include measures to promote competition, transformation, “inclusive growth of the sector” and "universal access”.

“This is a vital part of bringing down the costs of data, which is essential both for economic development and for unleashing opportunities for young people,” the president said. “We call on the telecommunications industry further to bring down the cost of data so that it is in line with other countries in the world.” 

hedleyn@businesslive.co.za