Cell C gives back radio frequency spectrum

Cell C says it voluntarily surrendered specific radio frequency spectrum bands to the Independent Communications Authority of South Africa (Icasa) as part of its network strategy.

The mobile network operator gave back its spectrum assignments in the 7GHz, 8GHz, 10GHz, 15GHz, and 38GHz bands, as well as its E-band spectrum.

Cell C said its application to Icasa to surrender the spectrum was approved in December 2024.

“The spectrum in question was previously used for microwave links on Cell C’s own radio access network to connect its base stations for the provision of mobile services to customers,” a company spokesperson explained.

“Following the decommissioning of Cell C’s own radio access network (RAN) and its transition to its Capex-light model, the use of these microwave links became redundant.”

Cell C is referring to the fact that it no longer operates its own cellular network, instead outsourcing it to South Africa’s biggest players — Vodacom and MTN.

The company chose years ago to stop its capital expenditure (Capex) into its radio access network, as there was no way for it to match pace with the over R10 billion each that Vodacom and MTN invested into their South African networks.

Cell C partnered with MTN to build a “virtual RAN” using its lower-frequency spectrum in the 900MHz, 1.8GHz, and 2.1GHz bands.

This spectrum was not surrendered and was most recently the subject of a lengthy process to transfer control of the spectrum licences to Cell C’s parent, The Prepaid Company.

The Prepaid Company, a wholly owned subsidiary of Blue Label Telecoms, wants to increase its voting power over Cell C to more closely match its over 63% economic interest in the company.

Currently, its voting power is capped at below 50% until it gets approval from all the relevant regulators to take control of Cell C.

Icasa has already approved Cell C’s transfer of control of its network, service, and primary spectrum licences to The Prepaid Company. It should be noted that only licence control, not ownership, was transferred.

Using Cell C’s three primary spectrum bands, MTN builds and operates a radio access network for Cell C customers to use.

Under the terms of the deal between Cell C and MTN, Cell C subscribers can also roam on MTN’s towers.

In exchange, MTN gets access to a portion of Cell C’s spectrum, which it pools with its own to achieve a large chunk of contiguous bandwidth. This pooling arrangement is the subject of any ongoing court case between Vodacom and Icasa.

Currently, Cell C uses the MTN vRAN mainly for its prepaid and mobile virtual network operator (MVNO) customers. MVNOs using Cell C include Capitec Connect and Shoprite K’nect.

Cell C also has a regular roaming agreement with Vodacom, which it uses for most of its prepaid customers.

Cell C cutting costs

The reason Cell C would want to return the spectrum it used for its microwave links is to reduce its operating overheads.

Icasa revamped its spectrum licensing fee system in April 2012 with what it termed the Administrative Incentive Pricing (AIP) scheme.

Under AIP, operators are charged based on how much bandwidth they have been licensed and whether the spectrum is used for point-to-point links or serves a whole area, like with cellphone towers.

The rationale behind AIP was for Icasa to at least cover the administrative cost it incurs to regulate spectrum.

It also hoped to disincentivise hoarding by attaching a significant enough cost to spectrum so that operators should not be able to justify spectrum sitting idle.

While the spectrum for point-to-point microwave links that Cell C is giving up are some of the cheaper licences, such costs add up.

Cell C surrendering the spectrum indicates that Icasa’s AIP scheme is working to reduce the amount of spectrum sitting in operators’ hands without being used.

Article thumbnail: Cell C CEO Jorge Mendes during a public hearing held by Icasa regarding the transfer of control of their radio frequency spectrum licences.