Court makes ruling with significant consequences for South African networks

The Pretoria High Court has denied Vodacom an interim interdict against Icasa approving spectrum pooling arrangements between MTN, Cell C, and Liquid Telecom, despite agreeing that Vodacom established a case for one to be granted.

In a judgment handed down on 21 February 2025, Judge Etienne Labuschagne agreed with Vodacom on at least two counts that Icasa’s approval of MTN’s spectrum pooling applications was unlawful.

Vodacom launched legal action against the Independent Communications Authority of South Africa (Icasa) in May last year.

South Africa’s largest mobile network said Icasa had quietly approved arrangements in 2022 that allowed MTN to combine some of its radio frequency spectrum resources with that of Cell C and Liquid.

Spectrum is the lifeblood of any wireless network operator. It is the raw bandwidth they use to communicate between their towers and customer devices like smartphones.

As a result of the spectrum pooling arrangements, Vodacom said Icasa had given MTN a substantial and unfair advantage.

Vodacom argued that, at the very least, Icasa should have held public consultations and amended the spectrum licences of MTN, Cell C, and Liquid to permit MTN to use the other two operators’ spectrum.

Judge Etienne Labuschagne agreed with these parts of Vodacom’s argument.

“A successful application to share spectrum must be reflected in a licence,” his ruling stated.

Although Labuschagne rejected Vodacom’s reasoning that Icasa’s current regulations did not permit any spectrum sharing arrangements, he still agreed that the industry regulator had granted MTN’s application unlawfully.

One particularly heated issue was that MTN used the guard bands that separated its spectrum from the frequency blocks licensed to Cell C and Liquid.

These guard bands are in place so transmissions on one operator’s network do not cause interference on another.

Since MTN was pooling its frequencies with that of a neighbouring operator to amass a huge, contiguous block of spectrum, it no longer needed the protection of the guard bands and could use them for subscriber traffic.

However, it was not paying Icasa for that additional spectrum.

Icasa calculates spectrum licence fees based on a formula called Administrative Incentive Pricing (AIP).

Under AIP, spectrum licence fees increase the more bandwidth an operator is assigned. However, operators are not charged for the guard bands since that spectrum is deemed unusable.

Because of this, Labuschagne ruled that Icasa should have conducted public consultations before MTN was allowed to use the guard bands and its licences should have been amended accordingly.

Telkom, which supported Vodacom in its interdict application, also raised the issue that Icasa had effectively allowed MTN to override the spectrum caps the regulator had imposed in its 2022 auction.

Icasa auctioned off substantial chunks of sought-after spectrum three years ago, generating nearly R14.5 billion in revenue for the national fiscus. Vodacom and MTN spent over R5 billion each.

Following a competitive analysis of the market, and as part of a compromise with smaller players, Icasa capped the amount of spectrum Vodacom and MTN were allowed to acquire at the auction.

Labuschagne ruled that Vodacom and other affected parties had the right to be heard regarding the impact MTN’s pooling arrangements would have on competition between mobile network operators.

“The process followed was flawed and the need to assign the guard bands to make the pooling efficient places the need for public participation beyond doubt,” the judge said.

“I am satisfied that Icasa erred in not following a process of public participation. The sharing arrangements approved by Icasa has the capacity to adversely affect the rights of other mobile network operators who have licences for spectrum.”

Vodacom is right, but denied interdict

In denying Vodacom’s interim interdict, Labuschagne said that the matter did not satisfy the “clearest of cases” requirement of the so-called OUTA principle.

The OUTA principle comes from South African case law that deals with the separation of powers between government and the judiciary, specifically concerning interim interdicts.

That interdict application involved the controversial e-toll system in Gauteng and was brought against the state by the Opposition to Urban Tolling Alliance, later renamed the Organisation Undoing Tax Abuse (OUTA).

Since Icasa is an independent regulator that falls under a government department, the issue of separation of powers featured prominently in the arguments before the court.

Labuschagne ruled that, in this case, there was not an inevitable and obvious resolution of the dispute based on the facts as required by the OUTA principle.

He also said he was concerned about the potential for interference of an interim interdict with Icasa’s supervisory role of approved shared spectrum in the public interest.

Another risk of separation of powers harm had to do with Icasa’s ability to collect spectrum licence fees from operators.

“Licensees in respect of radio frequency spectrum are liable for fees based per MHz of spectrum licensed to them,” he explained — referring to the AIP formula.

“If the respondents are restrained from utilising the pooled radio frequency spectrum, this has the potential of interfering with the power of Icasa to recover fees for the approved spectrum blocks.”

This was a curious conclusion for the judge to draw, as operators would still have to pay Icasa for their individual blocks of spectrum. The interdict would not cause MTN, Liquid, and Cell C to lose their regular spectrum licences.

Regardless, Labuschagne also considered the impact of reversing Icasa’s decision on end users, as the spectrum pooling arrangement has greatly improved MTN and Cell C’s network performance.

“To deprive the public of such benefit is no small matter. They would be prejudiced. It is the grass that gets trampled when elephants fight,” Labuschagne said.

He also took into account that despite the benefit to MTN, Vodacom’s market share has also improved.

“The cumulative effect of the aforesaid considerations is that, despite the applicant establishing the elements required for an interim interdict, the Court, in the exercise of its overall discretion, declines to grant the interim relief.”

Vodacom, Icasa, and the other respondents in the matter will now begin exchanging court papers for the merits of the case to be heard.