Neotel certain of network readiness

By Paul Vecchiatto for Neotel
Cape Town, 23 Feb 2007

Neotel is confident the Department of Public Enterprises (DPE) will ensure timely readiness of the long-distance network it requires to enable it to offer services, it says.

The second national operator was reacting to statements made earlier this week by finance minister Trevor Manuel, during his 2007 budget speech.

Manuel said infrastructure provider Infraco would implement long-distance backbone broadband capacities between metropolitan centres, while Neotel will focus on the distribution networks within the metropolitan areas, deploying metropolitan area networks and last mile infrastructure.

Manuel also announced Indian-owned telecommunications group VNSL, which holds 26% of Neotel, would get the same percentage in Infraco, with government holding the rest.

Last year, Manuel allocated R647 million in seed funding to get Infraco off the ground. However, he did not elaborate on the exact amount of further funding, leaving it within an overall contingency account of R3 billion that is also earmarked for other projects such as the Pebble Bed Nuclear Reactor.

According to Neotel's statement, it signed agreements with the DPE in 2005, to ensure access to the inter-city telecom assets deployed by Eskom and Transnet in anticipation of the licensing of SA's second national operator. This agreement envisages these assets to be housed under Infraco.

"Readiness of the Infraco network is an integral part of the launch of Neotel's services and, accordingly, a significant amount of work is already under way towards ensuring the readiness of this long-distance network," the statement says.

The Infraco network is based on the existing infrastructure, spanning approximately 8 000km. It is based on fibre optic cabling that originally belonged to state-owned enterprises Eskom and Transtel.

Licences, shareholding

Neotel says its project plans for the introduction of the first national services are based on the indicated readiness of the long-distance network. It adds that it is confident of meeting its planned timelines to enable the national network to be switched on in the first quarter of this year.

The telecoms group says queries relating to the shareholding, funding or licensing requirement for Infraco may be best addressed to the DPE.

Neotel holds an infrastructure-based PSTS licence and the Independent Communications Authority of SA is on record as stating that it has no knowledge of any plans to amend Neotel's licence based on Infraco.

Minister of public enterprises Alec Erwin and minister of communications Ivy Matsepe-Casaburri have said in Parliament that they envisage no problem with the licensing issue. However, they have supplied no details yet.

An analyst, who wishes to remain anonymous, says all existing licences will be converted in terms of the Electronic Communications (EC) Act.

"However, Neotel still has its own licence obligations that it has to meet. As per the EC Act, all existing licences must be converted within 24 months; how it will happen no one knows," he says.

The analyst also says the question of the shareholding in Infraco seems contentious as only VSNL has received a stake to the exclusion of the other Neotel shareholders.