In terms of the Electronic Communications Act 36 of 2005 (the EC Act) all electronic communications networks, electronic communications services, broadcasting services and use of the radio frequency spectrum are required to be licensed unless exempted from the licensing requirements.  The EC Act provides a horizontal licensing framework for the licensing of electronic communications networks, electronic communications services, broadcasting services and radio frequency spectrum.  Operators are no longer licensed as vertically integrated entities to operate a network and provide a service, as was the case under the Telecommunications Act 103 of 1996 (which was repealed by the EC Act).  Instead, networks and services are licensed separately so that an operator which both operates a network and provides services over that network is required to hold separate licences in respect of that network and each of the services provided.  To the extent that radio frequency spectrum is utilised in the provision of services, a spectrum licence will also be required.  The sector regulator, the Independent Communications Authority of South Africa (ICASA) administers the licensing of operators and service providers.

The EC Act provides for individual and class licences to be granted.  Individual licences will be required in respect of networks and services of relatively large scope which have a socio-economic impact, whereas class licences to which general conditions are applicable will be required for other networks and services.  Applications for individual licences, in order to operate a network or provide a service for which an individual licence is required, may only be submitted to ICASA in response to an invitation to apply.  In addition, applications for individual licences to operate electronic communications networks may only be considered in terms of a policy direction issued by the Minister of Communications.

All licences issued in terms of the Telecommunications Act and the Electronic Communications Act 36 of 2005 are in the process of being converted by ICASA to appropriate licences in terms of the framework set out in the EC Act.  As such, an operator such as Telkom which was previously licensed to provide a public switched telecommunications service (PSTS) as a whole will now have its licence converted to one or more separate licences in respect of the networks operated and services provided over those networks. This conversion process is required to be completed by 19 July 2008.  The converted licences are to be issued on terms that are no less favourable than the previous licences.  In addition, all converted licences will ordinarily retain their original term of validity.