Eskom softens SNO criticism

Johannesburg, 26 Nov 2002

Eskom yesterday issued a statement seeking to soften, if not backtrack, on its criticism of the two parties bidding for a 51% stake in SA`s second national telephone operator (SNO).

Telecommunications regulator the Independent Communications Authority of SA (ICASA) is evaluating the bids of the Goldleaf and Optis consortiums to control the SNO. Public input on the bids was invited and Eskom`s take on the bidders` structure and business plans had very little praise.

Both bidders, it said, were nothing but intermediaries without the money, strength or experience a real operator would bring to the table. It also contended that both companies could fail in their attempts to bring investors on board and that such failure could jeopardise the entire SNO. As such, it concluded that both had failed to meet government`s objectives.

However, in its latest statement Eskom said it was not making government`s decisions for it and asked that the context of the comments be kept in mind.

"Eskom Holdings and Eskom Enterprises submitted the response in the context of full recognition and support of the government and ICASA`s prerogative and unfettered right to determine the final outcome of the SNO process," it said. "Eskom Enterprises regrets any impression to the contrary that its submission may have created."

Optis has refused any further comment on the process, while Goldleaf would say only that it recognised the root of Eskom`s concern and believed the matter could be resolved in private.

However, both consortiums can claim the operational experience Eskom says they lack. Goldleaf`s biggest constituent is the Premier Contracts Agency, a group of former British Telecoms employees who have established and help run many SNOs around the world, while Optis has Shanghai Telecom as a minor investor.

Observers both within and outside the process have mooted the possibility that Eskom is merely strengthening its bargaining position ahead of crucial integration talks with whichever consortium wins the bid.

There seems no legal route for ICASA but to declare a winner, despite objections, unless both bids fail to meet basic criteria. However, although Eskom`s Esi-Tel and Transtel`s ownership of the SNO has been set at 30%, it has not been determined which of their assets will be transferred to the new company to secure that stake.

Both Goldleaf and Optis plan a quick integration between themselves, the parastatals and black-empowerment winner Nexus, leaving a small window for integration negotiations.

Both Esi-Tel and Transtel are on record as saying they consider it their duty towards the government to derive the maximum possible value from their assets.