Last step in third cell licence process?

Johannesburg, 18 May 2000

The South African Telecommunications Regulatory Authority (SATRA) yesterday announced that Grant Thornton Kessel Feinstein has been appointed to examine financial information in its ongoing process to select the preferred applicant for the third national cellular licence.

Saudi-backed consortium Cell C was named as the authority's intended preferred bidder in late February, but the objections and court action that followed forced a re-examination of the selection. The financial plans of the various applicants have become a particularly contentious issue, as an earlier report seemed to contradict the findings made public by the SATRA council.

The report, by auditor BDO Spencer Steward, raised questions about the financial viability of the Cell C business plan, while the council found the financial projections conservative and the company stable. Although confidential, the BDO report was widely leaked.

Grant Thornton Kessel Feinstein will now examine the BDO report as well as subsequent information, including submissions made by the applicants and the input received at public hearings on the third licence.

"The terms of reference are quite different to that of BDO," says councillor William Currie, acting as spokesman for the council. Currie is one of the main financial evaluators. "The BDO report was [based] on information from June [1999]. There has been a lot of input since then."

According to Currie, the decision to announce Cell C as the intended preferred bidder stands until the new report has been evaluated. The council hopes a second round of scrutiny may prevent further legal action by the eventual losers.

"We want to use another advisor to make doubly sure that the correct decision has been made," he says. Financial plans are key to the selection and SATRA cannot afford to have doubt cast on its analysis. "We don't want the merits of our decision to be determined in court," he says. "Our job is to make sure the decision is sound. A short delay now may have long-term benefits."

However, other applicants still have recourse to the courts and some have indicated that they will pursue such action regardless of current scrutiny.

But this should be the end of a process that all parties agree has dragged on far too long. "This is the last phase and we will be making a final decision," Currie says.

The new report is anticipated in the second week of June, although SATRA is not willing to give a fixed date as to when it will be completed or when a final recommendation will be made to communications minister Ivy Matsepe-Casaburri.

Meanwhile, a looming deadline may force a speedy decision.

"A final decision must be made before the new authority is formed," Currie says. SATRA is to merge with the Independent Broadcast Authority to form a single regulator during the second half of the year, provisionally named the Independent Communications Authority of SA.

The parliamentary portfolio committee on communications is expected to refer the names of chosen councillors to the President for approval by 23 June, after which a single new council will be appointed. "[The present SATRA council] must make the final decision," Currie says.

Other activities, such as rulings on complaints and counter-complaints by value-added network service providers and Telkom, will be taken over by the new authority.