Eskom wants SNO licence sooner

Johannesburg, 02 May 2002

Eskom Enterprises wants to start competing with Telkom sooner rather than later, and believes that only willingness from government is required to allow it to do so.

"We think the government should ... consider issuing the SNO [second national operator] licence as soon as possible so that Eskom Enterprises together with Transtel can start the liberalisation process," says Vusi Ngubeni, executive director of telecoms at Eskom, in a statement released today.

Esi-Tel, a subsidiary within Eskom Enterprises, is to share 30% of the eventual SNO consortium with fellow state-owned company Transtel. They are to join with a black empowerment partner, which is being selected at the moment, which will own 19% of the consortium. The further 51% has been allocated to what will probably be a single foreign operator.

But the process to select the majority owner has not yet started, even though the government`s Department of Communications has promised that an invitation to apply for the stake would be issued by next week.

The net effect is that all players, including government, admit that the SNO will not be established until at least October. Telkom`s five-year exclusivity on fixed-line telecommunications services officially expires next week but there will be no competitor to take advantage of the situation.

Eskom and Transtel both contend that they can start to offer services by next week, but they face opposition from both the Independent Communications Authority of SA (ICASA) and Telkom.

ICASA interprets the Telecommunications Act, as it was amended late last year, to say it should issue a single licence to a single company, leaving no room for interim measures.

Telkom says it would be extremely wary of entering into any contract or interconnect agreement with an SNO when its major shareholder is not involved in the deal.

"We will not enter into a contract with them that can be rejected when the SEP [strategic equity partner] arrives," says Gabriele Celli, Telkom`s executive for regulatory relations.

Yet Eskom believes there are ways of issuing the final SNO licence before the majority owner has been selected. Fatima Jakoet, GM for telecommunications at Eskom Enterprises, is not willing to discuss the specific mechanisms, but says selecting the SNO parties and forming the SNO as a legal entity are separate processes.

She also believes that issuing the licence now would sweeten the deal for foreign operators.

"The sooner we demonstrate the commercial viability and connect major customers to our network, the sooner a project at the tip of Africa will look attractive to a foreign partner," she says.

Jakoet fears that a Telkom refusal to negotiate an interconnect agreement without the full SNO could be a delaying tactic. She believes negotiations on such an agreement could start almost immediately, even before crucial facility sharing regulations have been completed.