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MTN spectrum purchase will be funded by tower sale proceeds

South Africa’s MTN will use the proceeds of a tower sale to fund the spectrum it bought in an auction this week for 5.2 billion rand ($346.86 million), its Chief Financial Officer said on Friday.

South Africa completed its first radio frequency spectrum auction on Thursday, collecting 14.4 billion rand or nearly a billion dollars ($960.54 million) from six bidders, and taking the country a step closer to wider 5G internet connection.

MTN South Africa acquired a total of 100 MHz of radio frequency spectrum across the 800 MHz, 2,600 MHz and 3,500 MHz frequency bands, taking its total permanent spectrum holdings to 176 MHz from 76 MHz.

“We’re pleased with the outcome and how it fits into our capital allocation discipline of prioritising investments in our networks. This will be funded from the proceeds that we expect to get from the SA (South Africa) tower sales,” Group CFO Tsholofelo Molefe told investors in a call.

MTN will receive about 5.2 billion rand, it said, from selling and leasing back more than 5,000 towers in South Africa to London-based IHS Tower.

Should the mobile operator not receive the proceeds within 30 days of the regulator’s award announcement, it will use cash from its holding company to bridge the gap, Molefe said.

Bigger local rival Vodacom South Africa said earlier it will pay 5.38 billion rand for 110 MHz of spectrum across the 700 MHz, 2,600 MHz and 3,500 MHz bands.

The country’s two big operators said they’ll use the spectrum to expand both 4G and 5G connectivity to more parts of the country, while also enhancing rural, peri-urban, and urban network coverage, especially better indoor penetration.

Operators waited some 17 years for spectrum to be released on a permanent basis as the process was slowed by litigation delays. Reuters

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