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Pricing radio frequency spectrum in South Africa

Pricing radio frequency spectrum in South Africa Purpose – The wireless revolution of the last decade has fuelled unprecedented demand for access to radio frequency spectrum in South Africa. For the first time, the Independent Communications Authority of South Africa faces the daunting task of pricing radio frequency spectrum in a transparent and quantitative manner, while allocating the asset within the framework of black economic empowerment. Design/methodology/approach – The purpose of this paper is to illustrate how real options analysis may be applied to achieve the goal of right pricing of radio frequency spectrum. This paper aims to combine theoretical insights with an empirical case study. Findings – Results suggest that the primary price of a licence will vary according to the profit an entity expects to realize, rather than the licence having one fair value price. Originality/value – Although such a conclusion may be counter‐intuitive to normal business practice, it is particularly relevant in the South African milieu of empowerment and economic participation by all. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Advances in Management Research Emerald Publishing

Pricing radio frequency spectrum in South Africa

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Publisher
Emerald Publishing
Copyright
Copyright © 2009 Emerald Group Publishing Limited. All rights reserved.
ISSN
0972-7981
DOI
10.1108/09727980911007190
Publisher site
See Article on Publisher Site

Abstract

Purpose – The wireless revolution of the last decade has fuelled unprecedented demand for access to radio frequency spectrum in South Africa. For the first time, the Independent Communications Authority of South Africa faces the daunting task of pricing radio frequency spectrum in a transparent and quantitative manner, while allocating the asset within the framework of black economic empowerment. Design/methodology/approach – The purpose of this paper is to illustrate how real options analysis may be applied to achieve the goal of right pricing of radio frequency spectrum. This paper aims to combine theoretical insights with an empirical case study. Findings – Results suggest that the primary price of a licence will vary according to the profit an entity expects to realize, rather than the licence having one fair value price. Originality/value – Although such a conclusion may be counter‐intuitive to normal business practice, it is particularly relevant in the South African milieu of empowerment and economic participation by all.

Journal

Journal of Advances in Management ResearchEmerald Publishing

Published: Aug 28, 2009

Keywords: Empowerment; South Africa; Radiofrequencies; Licencing; Pricing

References