ICASA closer to completing SNO licence award

5 Nov 2003

The long-running saga of South Africa’s quest to establish a second national operator (SNO) to compete with Telkom SA in the fixed line market may finally be drawing to a close. Communications Minister Ivy Matsepe-Casaburri said that the authorities plan to name investors looking to take a 51% stake in the start-up within the next eight weeks, once the government had identified suitable contenders, but that no new tender process would be held. Previous attempts to award the SNO have ended in failure. Most recently in August this year the telecoms regulator, the Independent Communications Authority of South Africa (ICASA), rejected two applications for a licence from TWO Consortium and WIP Investments Nine – trading as CommuniTel Consortium – on the grounds that neither demonstrated evidence of having adequate long-term funding to service a 25-year SNO licence. Under the terms of the award, the new SNO licensee would have had to roll out fixed line services to cover all major metropolitan areas within the first five years and achieve 80% coverage of the country in the first ten years. In rejecting the two bids the regulator recommended that the government formally close the application process and contemplate whether state utility companies Transtel and Eskom, and black empowerment group Nexus, which together hold 49% of the SNO already, could proceed without a partner. However, the state looks set on forging ahead with its own plan. Not surprisingly, given the previous failures industry watchers have reacted cautiously to the announcement saying that it is unlikely a new shareholder will bring enough expertise to the table and that the SNO’s minority shareholders lack the necessary wherewithal to offer a serious threat to the incumbent PTO.

South Africa