When will Telkom be faced with a competitor?

19 Dec 2002

South Africa’s attempts to introduce competition to the fixed line telephony market were met with a new hurdle yesterday, when the two bidders for a stake in new fixed line operator – dubbed Sentech – failed to meet the criteria needed to make an offer. The Goldleaf and Optis consortiums, which were both planning to submit bids for a 51% stake in the new operator, are both being given 14 days to respond to questions which have arisen concerning certain requirements of the bidding process. Goldleaf, which is made up of former BT Group executives, UK-based carrier Gateway Communications and Nigerian investor group Telecom Africa International, must prove that it has at least 500,000 phone users at its existing operations worldwide, while Optis, which consists of a group of local investors and China Telecom subsidiary Shanghai Telecom, has been asked to provide details of its financing arrangements, as well as respond to allegations of plagiarism in its bid documentation, an accusation which it has wholeheartedly denied. If the two groups fail to respond to the queries within two weeks, they will be disqualified from the bidding process, and the sale will be postponed. The government had initially hoped to have Sentech, which was awarded both a carrier’s carrier and multimedia licence in May 2002, up and running by March 2003, but this now looks unlikely to go ahead until later in the year, giving Telkom more time to enjoy its monopoly. The need for a new fixed line operator in South Africa is becoming increasingly desperate, as Telkom’s service has been adversely affected by the popularity of mobile offerings and the poor economic environment, which has caused large numbers of users to be disconnected for non-payment of bills. In the year to the end of March 2002 its number of access lines in service fell from 4.96 million to 4.92 million.

South Africa
CIT's Yearbook of African Telecommunications 2003