Regulator to challenge state on second licence bid

10 Feb 2003

South Africa’s telecoms watchdog, the Independent Communications Authority of South Africa (ICASA), is contemplating a legal challenge to the government over concerns that its authority has been illegally undermined by a new bidding process to select a second network operator (SNO). ICASA has instigated an inquiry following a decision by the Communications Minister Ivy Matsepe-Casaburri to bar it from sitting on a new committee to adjudicate fresh bids for the concession. ICASA chairman Mandla Langa said it would pore over the minister’s proposals with ‘rigorous legal scrutiny’ and pursue a challenge if there was evidence of a clear violation, adding that even if the examination proved inconclusive it would still seek to become involved in the adjudication process. Matsepe-Casaburri’s latest initiative is designed to speed up the arrival of competition to the market by only involving the regulator at the end of the process when it would be consulted on the application of the state’s preferred bidder.

ICASA’s possible opposition could yet derail the minister’s plans, however. The process to establish a second national operator began in 2002 at which time it was expected that licences would be issued in 2003 or early 2004 at the latest. At the close of the SNO license application process though, only two bids had been received from relatively unknown players – Optis Communications and the Goldleaf consortium – and these were subsequently rejected by ICASA as unsuitable. ICASA’s decision led Goldleaf to threaten to call for a judicial review which, if it had gone ahead, would have resulted in a lengthy court battle and stalled the whole licensing process by months. The minister’s new strategy for selecting a 51% stakeholder in the licence staved off a law suit by Goldleaf, which has opted instead to submit a fresh bid. Its new-found enthusiasm for the tender stems from the fact that it has already invested ZAR70 million on researching the market and will have a distinct advantage over new bidders as Matsepe-Casaburri has promised to award the licence within 90 days. The other rejected bidder, Optis, is also back in contention and is keen to assess the new bidding criteria. Under the existing terms of the award, national PTO Telkom SA will be required to allow the SNO to use all of its telecommunications facilities for the first two years of its licence, on a resale basis, so as to enable national service-based competition until the carrier can roll out its own infrastructure. The Telecommunications Act also requires the minister to conduct an assessment of the feasibility of issuing further fixed line licenses from May 2005.

South Africa