MTN Group files lawsuit to challenge South Africa’s 5G Spectrum sale

MTN Group Ltd. has taken legal action against the terms of a highly anticipated auction of new broadband spectrum in South Africa, saying the company and rival Vodacom Group Ltd. are being shut out of bidding for the most appealing 5G bandwidth.

Africa’s largest wireless carrier asked the High Court in Johannesburg to correct or set aside elements of the process set to begin in less than two months, according to legal documents. MTN fears that by the time it’s allowed to take part in bidding, there won’t be any of the most prized elements left, the company said.

The Independent Communications Authority of South Africa’s structure of the auction leaves MTN with “no option but to seek relief from the courts,” the carrier said in an emailed statement on Friday.

The move threatens to delay or even kill the release of spectrum that’s been called for by South Africa’s telecom operators for several years, and is seen as a way to boost the country’s moribund economy.

Previous attempts to hold the auction have been scuppered by disputes between the government and regulator over how it should be conducted and who should most benefit, elements that are central to MTN’s case.

MTN and Vodacom are by far the two largest mobile-phone companies in South Africa, and the telecommunications ministry has in the past said that operators with no access to spectrum should be given the opportunity to enter the market and boost competition. That may also encourage smaller businesses to take part, helping to address inequality concerns.

The two market leaders have also been targeted for charging customers higher data prices than in many other countries, and in late 2019 the Competition Commission ordered them to cut bills or face sanctions over their dominance. The companies argue that new spectrum would mean tariffs fall naturally.

Keabetswe Modimoeng, chairman of regulator Icasa, announced the upcoming sale of more than 8 billion-rand ($530 million) of spectrum in early October, with the terms set in subsequent reviews and consultations.

MTN shares dropped 1.8% as of 11:22 a.m. in Johannesburg, extending their decline over the past 12 months to 23%. Vodacom fell 1.1%