Telkom says it can fund R2.1bn cost for radio frequency spectrum

Customers are served at a branch of Telkom, in Johannesburg on 2 March 2022. Reuters/Siphiwe Sibeko/File Photo

Telkom, 40% owned by the government, and fellow telecom operator Rain won the first round of bidding in the auction held earlier in March. Operators have been waiting over a decade for spectrum licenses needed to lower data costs, roll out 5G and add 4G network capacity.

Telkom purchased two chunks of 10MHz in the 800Mhz band, giving it access to frequencies below 1GHz for the first time - crucial to providing better internet coverage in underserved and rural areas and better indoor coverage. It also acquired 22 MHz in the higher frequency 3500 MHz band.

The company said R1.1bn of the total cost was expected to be paid in its current financial year, affecting its debt levels, capital expenditure and free cash flow.

Telkom, Rain emerge as first winners of spectrum auction

8 Mar 2022

"Notwithstanding the financial impact, Telkom has adequate capacity on its balance sheet to fund the spectrum while maintaining sufficient headroom in its loan covenants," it said.

The main spectrum auction was due to take place earlier this month, but Telkom helped block it via a court application, saying the auction would not allow it to obtain the amount of spectrum it needed to compete effectively.