How much South African operators’ spectrum assets are really worth

An analysis by Daily Investor revealed that Vodacom, MTN, Cell C, Telkom, and Rain’s combined spectrum assets are worth between R39 billion and R50 billion.

Spectrum is the lifeblood of mobile operators, serving as the invisible infrastructure that powers their voice and data networks.

It determines these networks’ speed, capacity, and coverage, directly impacting user experience.

Mobile operators run into capacity constraints without sufficient spectrum, which can influence their network performance.

Spectrum is a finite and regulated resource, making obtaining and managing spectrum licenses expensive.

Spectrum auctions, like the one the Independent Communications Authority of South Africa (ICASA) concluded last year, are highly competitive, with billions spent to secure these licenses.

ICASA’s March 2022 spectrum auction involved six qualified bidders – Cell C, Liquid Intelligent Technologies, MTN, Rain, Telkom, and Vodacom.

The auction allowed bidders to buy additional spectrum in the 700 MHz, 800 MHz, 2,600 MHz, and 3,500 MHz bands.

The spectrum auction raised R14.4 billion for the national fiscus and showed how valuable spectrum is to mobile operators.

ICASA chairperson Keabetswe Modimoeng said 306 Mhz was sold. The only unsold spectrum was one lot of 2 x 10MHz in the IMT800 Band.

Another benefit of the auction was that a price was now associated with spectrum in South Africa.

It made it possible to calculate how much a megahertz of spectrum in specific bands is worth. In turn, it is possible to put a value on the spectrum assets of mobile operators.

Daily Investor used a few methods to calculate the value of Vodacom, MTN, Cell C, Telkom, and Rain’s spectrum.

The first was to use the money paid for all spectrum bands and divide it by the megahertz sold during the auction.

The average price paid per megahertz during the 2022 ICASA spectrum auction was R47 million.

Another method was to calculate the average price paid for spectrum per spectrum band. It showed that operators paid significantly more for lower frequencies than higher frequencies.

This is unsurprising. Lower frequencies have longer wavelengths and can cover larger areas than higher frequencies.

Mobile operators, therefore, require less network infrastructure to cover a wider area. This is especially valuable in rural areas.

Higher frequency spectrum has the advantage of higher data capacity, but the drawbacks of worse indoor penetration and less coverage make it less desirable in many cases.

Using data from the spectrum auction reveals the spectrum asset values below –

• Telkom spectrum is worth between R8.5 billion and R9.5 billion.
• Vodacom’s spectrum is worth between R8.5 billion and 10.4 billion.
• MTN’s spectrum is worth between R8.3 billion and R10.6 billion.
• Cell C’s spectrum is worth between R3.8 billion and R6.2 billion.
• Liquid’s spectrum is worth between R4.2 billion and R5.4 billion.
• Rain’s spectrum is worth between R6.2 billion and R7.7 billion.

It gives a combined spectrum asset value of between R39 billion and R50 billion, depending on which spectrum value calculation method you use.

How much mobile operators’ spectrum assets are worth

The table below shows the spectrum assets value of Vodacom, MTN, Cell C, Telkom, and Rain, based on the March 2022 ICASA spectrum auction values per megahertz.

Operator	Spectrum value (low-end valuation)	Spectrum value (high-end valuation)
Telkom	R8,547,958,689	R9,535,822,402
Vodacom	R8,482,444,469	R10,442,812,498
MTN	R8,260,390,949	R10,645,946,785
Cell C	R3,819,320,546	R6,196,379,991
Liquid	R4,174,606,178	R5,436,141,732
Rain	R6,184,795,235	R7,727,462,501
Total Value	R39,469,516,067	R49,984,565,910