SNO fears liberalisation KO

Johannesburg, 22 Nov 2004

The second national operator (SNO) needs to be operational as close as possible to 1 February next year, if it hopes to become a competitive entity.

This is the view of Transtel`s manager for government relations and regulatory affairs, Phatang Nkhereanye, who discussed his company`s views on the liberalisation of the industry at last week`s Webber Wentzel Bowens ICT Law seminar.

"My views are those of Transtel as a 15% shareholder, and not those of the remaining SNO shareholders, and while we are making progress with the business plan and shareholders agreements, the analogy of too many cooks spoiling the broth is not too far from the truth.

"The state-owned enterprises (Transtel and Eskom Enterprises) want a satisfactory timeline from the minister that will show how she expects the process to move forward next year, otherwise we will need to begin looking at other methods of utilising our network," he says.

Nkhereanye says that currently it looks as if the remaining 26% shareholding will only be sorted out sometime between March and May next year, and that if the SNO has to wait for this before it can begin operations, there will be additional problems as the window of opportunity will be that much smaller.

"What people need to remember is that the SNO should have had a three-year lead time on the liberalisation of the market, and the fact that we are not even licensed yet will put us at a serious disadvantage come 1 February next year," he says.

"The Convergence Bill will also cause problems for us, as a host of additional facilities-based providers may well be good for the market, but they will not be good for the SNO as it tries to establish a competitive footprint."

He claims that the timing of the Convergence Act, which looks likely to come into existence around March 2006 is also an issue, as it will not give the SNO enough time to acquire reasonable market share and consolidate its position in the market.

Nkhereanye also feels that the court action by 19% empowerment shareholder, Nexus Connexion, which is calling for a judicial review on the process that saw bidders CommuniTel and Two Consortium each awarded a 12.5% shareholding, is bad for the SNO as a whole.

"Not only is the court action by Nexus having a negative effect on the SNO, but we are also still waiting for the minister to supply an answering affidavit to the court, which means that the entire issue has been left up in the air," he says.

Asked whether he feels that Nexus should forget about legal action and rather buckle down and work with the other shareholders to drive the SNO forward, Nkhereanye says that this is undoubtedly what the empowerment shareholder should do.

"While Nexus does have a case in terms of the fact that the CommuniTel and Two Consortium bids were rejected by the regulator, the minister has been given a number of broad powers by the Telecommunications Act, so I feel she is within her rights to use these powers to drive the process forward by awarding a percentage of the shareholding to the two bidders."