ICASA: South Africa Reviews Dormant Telecom Licences

• ICASA is reviewing South Africa's I-ECNS licensing framework to enhance competition and universal access, following a ministerial directive from August 22, 2025.
• The regulator's preliminary assessment reveals that 470 issued I-ECNS licences are largely dormant, and the fixed-line and mobile markets are highly concentrated.
• Existing barriers to entry in the secondary licence market include high costs, lack of transparency, and lengthy approval processes, leading to the "warehousing" of licences.
• ICASA proposes a direct licensing mechanism for new operators and a "use it or lose it" policy to address dormant licences and artificial scarcity.
• These potential changes aim to reduce dependence on incumbents, facilitate market entry for small, medium, and micro enterprises, and improve regulatory certainty.

A key preliminary view from the regulator is to introduce a direct licensing mechanism, which would enable prospective operators to apply for new licences directly from ICASA, rather than being compelled to negotiate with existing licence holders.

The Independent Communications Authority of South Africa (ICASA) has initiated a comprehensive review of the licensing framework governing Individual Electronic Communications Network Services (I-ECNS) in the nation. This multi-phase inquiry, currently in its second stage, aims to assess the efficacy of the existing system and explore whether the issuance of additional I-ECNS licences could foster greater competition, broaden network coverage, and enhance universal access to vital communication services. This significant undertaking by ICASA follows a specific ministerial policy direction issued on August 22, 2025, which mandated the regulator to investigate how new individual network licences might contribute to a more competitive landscape and the widespread provision of electronic communications networks and services.

ICASA's preliminary findings, detailed in a recently published Discussion Document, highlight considerable deficiencies within the current South Africa telecom licensing framework. Despite the regulator having issued a substantial 470 I-ECNS licences, a significant proportion of these are reportedly inactive or dormant. The authority also observes a highly concentrated market for both fixed-line and mobile networks, where a limited number of licensees control the majority of the market share. This situation, coupled with an average of only about 11 ownership or control transfers approved annually, suggests that the current framework is not effectively stimulating the desired level of competition or market dynamism.

The existing South Africa telecom licensing framework, which primarily relies on prospective operators acquiring licences from current holders in a secondary market, has been identified by ICASA as a significant impediment to competition. Stakeholders have voiced numerous concerns regarding the substantial barriers to entry within this secondary market. These include a notable lack of pricing transparency, prohibitively high acquisition costs, and protracted approval processes, all of which deter new entrants. For instance, Amatole Telecommunications reported that securing a pair of I-ECNS and Individual Electronic Communications Services (I-ECS) licences through the secondary market exceeded R1 million, a figure that did not even include ICASA's own transfer application fee of R84,738 per licence.

Further exacerbating the issue, some stakeholders contend that the current system has inadvertently fostered an artificial scarcity of licences. This scarcity empowers existing licence holders to demand inflated prices, thereby making market entry exceedingly difficult for new operators. The practice of "warehousing" telecom licences ZA, where entities retain licences as strategic assets rather than actively deploying networks and providing services, was specifically highlighted by SprintSA as a detrimental outcome of the current framework. ICASA's assessment concludes that these combined factors—barriers to entry, the prevalence of dormant licences, and lengthy transfer approval timelines—have collectively undermined the overall effectiveness of the existing licensing structure.

In response to these identified challenges, ICASA is exploring several potential reforms to the I-ECNS licensing framework. A key preliminary view from the regulator is to introduce a direct licensing mechanism, which would enable prospective operators to apply for new licences directly from ICASA, rather than being compelled to negotiate with existing licence holders. This shift is anticipated to lessen dependence on incumbent operators and could significantly ease market entry for small, medium, and micro enterprises (SMMEs), thereby contributing to broader economic transformation.

Furthermore, ICASA is considering the implementation of a "use it or lose it" telecom licences policy. This approach aims to actively discourage licence holders from retaining licences purely for speculative purposes, ensuring that valuable spectrum and licensing rights are utilized for their intended public benefit. To enhance transparency and regulatory certainty, the authority also plans to publish clear guidelines for licence transfer approvals.

Notably, submissions from satellite operators, including major players like SpaceX, Amazon Leo, Eutelsat, and Sateliot, underscore the potential for additional licences to boost connectivity in rural and underserved communities and improve overall network resilience, highlighting the diverse perspectives within the industry on the future of South Africa's telecom licensing framework.

Lawyers advising telecommunications clients in South Africa should closely monitor ICASA's ongoing review of the I-ECNS licensing framework, as proposed changes, including direct licensing and 'use it or lose it' policies, could significantly alter market entry for new operators and impose new compliance risks or opportunities for existing licence holders, particularly those with dormant licences.

Source: Original reporting via regulatory review documents