State-owned Transnet says it does not foresee a battle with fellow parastatal Eskom for a stake in the second national operator (SNO), the company which is to start competing with Telkom next year.
A statement from communications minister Ivy Matsep-Casaburri on Wednesday caused confusion by reading that a "decision on which State-owned enterprise is to be included in the SNO is to be determined".
An earlier policy called for two Telkom competitors to be licensed, in which Transtel and Esi-Tel, the Eskom telecommunications subsidiary, would participate separately. But on Wednesday, government reverted to an earlier decision to license only one new operator.
Transtel CEO Karl Socikwa says it is unlikely that Transtel and Esi-Tel can be merged to form part of the SNO, as was originally envisaged.
"Given the timelines before the end of the Telkom exclusivity, if the scenario is to have [both Transtel and Esi-Tel] participating, then to first go though another step and merge the entities before going into the SNO, from where I`m sitting that wouldn`t be feasible," he says.
The SNO will be expected to be operational before the end of May next year, and with legislative amendments still to be passed by Parliament, the deadlines are tight.
Yet Socikwa says that does not mean either Transtel or Esi-Tel will be selected to participate in the consortium, but that the Department of Public Enterprise can decide to have both involved in their separate capacities.
"My reading is that it is not either one or the other, but that the Department of Public Enterprise has to come back and give an indication of how and in what manner we will participate."
In the unlikely event that the department decides only one company is to be included, that decision will rest with the department and there will be no bidding for the spot, he says.
That Transtel will be involved in the SNO in one way or another is just about a done deal as far as he is concerned. "There is no other way than to participate in the SNO," he says.
Although it is no longer certain that participation will mean an equity stake to be determined by government, Socikwa says equity would still be first prize, but that to speculate on a percentage now would be futile.
"The principle is that the way in which we participate must be commensurate to the value of Transtel as a running enterprise. The fundamental point of departure is that there must be no value destruction."
He says the value to be put on the SNO licence depends not only on the model used for calculations, but also on the reigning sentiment on world stock markets. The parameters for determining the value of Transtel are also still to be set out. "But we are looking at it as a standalone, going concern, with some other strategic value-adds such as our activity on the African continent figured in."
Transtel, he says, will call for some form of input into the selection process which will determine the winning consortium, should the invitation to apply for the licence attract more than one bidder. "We will want some kind of role, as we need to look at the culture and ensure we will be able to do business with the organisation as partners from day one."
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