An apparent request for proposal by the South African Telecommunications Regulatory Authority (SATRA), dated 11 April, invites proposals to furnish the authority with advice on the long-controversial third cellular licence. The document was leaked to the media today.
SATRA public affairs manager Kotli Molise could not immediately verify the validity of the document. "There is such a tender due to be issued," she says. "I do not know if [the document] is one of the early drafts, or the final draft maybe."
According to the document, SATRA is requesting advice regarding the financial plans of third cellular licence applicants, in particular the relevant strengths and weaknesses of such plans. The BDO report is also to be scrutinised in terms of its underlying assumptions, methodology, the conclusions reached in the report and the interpretation of those conclusions. A request is also made to analyse and comment on the submission made by various applicants with regards to the BDO report.
The document requests that the authority be furnished with advice before the close of business today. "It would be appreciated if you could treat this matter with the highest degree of confidentiality," it reads.
The report by BDO Spencer Steward, which analysed the financial plans of the various third licence bidders, was presented to SATRA in November last year. The analysis was requested by the SATRA council to support it in its decision-making process. The council has final decision-making powers and is responsible to recommend a bidder to the Minister of Communications.
The content of the report was confidential, but was eventually widely leaked to the media immediately before the authority announced its intended preferred bidder. It became highly controversial when SATRA's evaluation of the bidders seemed to show very little regard for its findings.
The SATRA evaluation found that its intended preferred bidder, Cell C, presented conservative financial projections, has a business plan validated by reputable securities companies and that the company will be financially stable because of funding of empowerment partners.
The BDO report, on the other hand, says in its analyses that Cell C will be technically insolvent from 2000 to 2005, that the proposed capital structure is not feasible and that re-capitalisation would be required for the company to function.
The report is less harsh with SATRA's runner-up, Telia/Telenor, although it found errors in the financial information provided. Nextcom, which came third in the SATRA ranking, is said to have a well-structured business plan, but may face problems with high gearing.
The report became involved in the court action brought by contender Nextcom to prevent the immediate awarding of the licence to Cell C. High Court Judge Eberhart Bertelsmann said in his ruling that it was important that the audit be made available to bidders in light of concerns with the bidding process.
"During the course of its deliberations regarding the recommendation that it is required to make to the Minister, the authority's council has given further consideration to the conclusions reached in the BDO Report," reads the leaked apparent request for proposal. "The authority now proposes to release the BDO Report to the applicants and to invite them to comment on the BDO Report."
SATRA is expected to issue a statement on the apparent tender later today.
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