Icasa was prohibited in March from proceeding with the auction, pending a hearing on contentions raised by telecoms operators Telkom and MTN as well as broadcaster E.tv.
Icasa had said it would appeal the court order while seeking an out-of-court settlement with the litigants.
"Despite the parties' best efforts, however, a comprehensive settlement has not been achieved at this stage," Icasa said in a statement.
It said it was complying with the court order to avoid drawn-out litigation that would only further delay the process.
The licensing of the spectrum and the Wireless Open Access Network (Woan), which will sell high-demand spectrum to telecoms operators on a wholesale basis, will now be reconsidered by the regulator, taking into consideration the litigants' concerns.
Operators have waited over 15 years for Icasa to release new spectrum licences, which are needed to lower data costs and expand 4G capacity while rolling out new 5G technology.
The pandemic exposed the wireless spectrum crunch as South Africans worked and studied from home, causing record-high data traffic volumes that forced Icasa to release a temporary emergency spectrum.
"The current spectrum litigation impasse is nothing short of a lose-lose situation for all as it serves to hamstring the growth of the sector," Icasa
chairperson Keabetswe Modimoeng said in the statement.
At the heart of the dispute is Icasa's decision to auction off 700MHz and 800MHz spectrum bands, currently used by television broadcasters, before the migration of broadcasting services from analogue to digital has been completed.
MTN is also arguing that a plan to allow smaller operators to bid for 5G spectrum first is unfair.
Icasa will consent to the court order at a hearing scheduled for Sept. 15. It said the minister of communications and digital technologies had committed to completing the broadcasting digital migration within five months.
Barring objections from the litigants, Modimoeng said that should allow the spectrum auction to take place by the end of January 2022.
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