No bidders yet as SNO deadline looms

By Rodney Weidemann for BT
Johannesburg, 17 Oct 2002

Communications Ministry spokesman Robert Nkuna believes that bids for the second national operator (SNO) licence will still be forthcoming, despite the fact that the final deadline is only two weeks away and no bids have yet been received.

"The department is still expecting bids from foreign operators for the SNO. It will be an extreme case if none are forthcoming and only if this occurs will the department make a further decision regarding the licence," says Nkuna.

Commenting on whether any official bids have been lodged, he says the department is trying to keep its distance from the regulator, the Independent Communications Authority of SA (ICASA), which will process bids for the licence.

"There have been no official bids for the SNO licence as of yet," says Kotli Molise, an ICASA spokesperson, adding that potential foreign investors might be waiting to launch an 11th-hour bid, just before the deadline expires on 31 October.

Financial Mail reported that a consortium, which is likely to include the BT Group (trading as British Telecommunications), could soon bid for the 51% strategic equity partner stake.

However, the group - known as the Premier Contracts Agency (PCA), a consultancy headed by three former BT executives - would not inject any cash into the deal. It would, instead, offer technical skills, management services, software systems and other resources.

PCA is believed to have done due diligence of Eskom Enterprises and Transtel, which are guaranteed a combined 30% stake in the SNO.

It has been estimated that in order for the SNO to successfully compete with Telkom, about R7 billion would be needed, and raising this capital will be one of the key challenges for the PCA, should the consortium make a bid for the licence.

The report says a large percentage of the money could be sourced from local banks, although this runs contrary to the government`s intention of gaining significant direct foreign investment from the SNO.

Meanwhile, Nkuna confirmed that communications minister Ivy Matsepe-Casaburri has yet to take a decision on whether to award the 19% empowerment stake in the SNO licence to Nexus Connexion.

Nexus is the bidder that was recommended by ICASA, but with the potential for legal action by some of the losing bidders, as happened with the drawn-out third cellular licence bid, Matsepe-Casaburri is obviously weighing her options very carefully.

Among the conditions for ICASA`s recommendation of the empowerment group was that Nexus show it can raise R2 billion, if the need arises, and that it should significantly increase its number of shareholders.

It is not known when Matsepe-Casaburri will announce her decision on the ICASA recommendation.