MTN South Africa pays R1.9 billion to ICASA in outstanding spectrum fees

MTN South Africa has paid R1.9 billion in outstanding spectrum fees to the Independent Communications Authority of South Africa (ICASA).

This emerged when MTN SA today announced its financial results for the third quarter (Q3) of 2023.

In a statement, the telco says in the quarter, its South African subsidiary made the outstanding payment of R1.9 billion for low-band 800MHz spectrum acquired in the 2022 auction.

The telecoms regulator recently acknowledged that it was still owed R5.8 billion in spectrum fees after it conducted a spectrum auction in 2022.

ICASA declined to provide a breakdown of the unpaid spectrum bills in relation to each telco, saying it cannot do so due to confidentiality.

The regulator gave the telcos an end of October deadline to settle their bills.

In March 2022, ICASA concluded the auction of the International Mobile Telecommunications spectrum – also known as high-demand radio frequency spectrum. The regulator indicated the auction process beat financial projections, raising R14.4 billion for the national fiscus.

ICASA received spectrum applications from six mobile players: Cell C, Liquid Intelligent Technologies, MTN, Rain Networks, Telkom and Vodacom.

MTN SA CEO Charles Molapisi says: “This spectrum will enable the efficient deployment in South Africa of capex going forward,” adding that MTN SA had committed R6.6 billion in capital expenditure in the period under review.

Power crisis considerations

Meanwhile, MTN SA delivered solid growth in the third quarter of 2023 on the back of improvements in network availability, which it says enabled the MTN Group subsidiary to provide its 36.8 million subscribers in South Africa with a substantially better network experience.

The telco notes that supported by investment and significant progress to enhance network resilience, MTN SA’s network availability rose to above 95% at the end of September, from just above 90% three months earlier.

This was despite the business contending with 273 days of load-shedding in the first nine months of the year, compared to 117 days in the same period of 2022, says the operator, adding that in Q3, there were 92 load-shedding days, compared to 55 days in Q3 2022.

MTN Group President and CEO Ralph Mupita, in the earnings release for the group, which operates in 19 markets, said;

Power outages in SA continued to be a challenge.

However, the significant progress made in our network resilience programme – which is tracking slightly ahead of plan – combined with lower load-shedding in Q3 (compared to H1), supported average network availability of above 95%.

According to MTN SA, this, in turn, underpinned a substantial rise in customer satisfaction, as measured by customer feedback obtained through the Net Promoter Score measurement.

MTN SA’s service revenue grew by 4.1% year-on-year in Q3 to R31 billion, accelerating from growth of 2.5% in Q2 and 1.3% in Q1.

“We are pleased with the further sequential improvement in momentum in Q3,” says Molapisi, referring to network site upgrades, which included installing new, more powerful batteries, renewable energy and generators, as well as increased site security.

The company’s margin on earnings before interest, tax, depreciation and amortisation (EBITDA) also improved quarter-on-quarter, to 37.2% in Q3, from 36.2% in Q1 2023, as MTN SA continued to execute on its drive to cut costs and safeguard profitability and cash flows, says the firm.

Molapisi says to mitigate the effects of economic headwinds, MTN SA would continue to enhance its customer experience, expand its customer value management offers, scale the fintech business and drive further expense efficiencies.

Looking ahead, Mupita is encouraged by MTN SA’s momentum. “Overall, MTN SA is tracking well to return service revenue growth and EBITDA margin to medium-term guidance ranges. We expect this to underpin MTN SA’s attractive cash flow generation profile over the medium-term, guided by our disciplined capital allocation framework.”