SNO timeline hinges on Nexus billions

Johannesburg, 04 Nov 2002

With the official timelines for the establishment of the second national telephone operator (SNO) due to be released by regulators this week, there are conflicting signals as to how fast the new player can be assembled.

Although details of the two bids received last week for the remaining 51% of the new operator have not yet been disclosed, the apparent strength of the Goldleaf consortium bodes well for a quick decision. Likewise the news that an irregular bid, from a group headed up by the controversial Trevor Tutu, had been rejected out of hand.

The Independent Communications Authority of SA (ICASA) says it received a last-minute bid from Tutu`s group, named Not Just Cheap Talk. However, the bid was rejected because it was not accompanied by the required R250 000 non-refundable application fee. The bid was received after close of business on Thursday, the last day for applications.

With the exact deadline vague and possibly extending until midnight on Thursday, the bid would have to have been properly evaluated if accompanied by the fee. However, its rejection leaves ICASA with only two bids to evaluate and compare.

The regulator may receive less good news from Nexus Connexion, the empowerment group that was finally selected as the recipient of a 19% stake of the future SNO on Thursday.

Although ICASA recommended the group ahead of rival bidders three months ago, communications minister Ivy Matsepe-Casaburri only gave her blessing to the choice on the closing day of bids for the outstanding 51%.

The minister`s office has refused to comment on the delay.

ICASA had made its selection of Nexus conditional on the company providing "adequate proof of its ability" to raise R1 billion in capital, and a further R1 billion if necessary. Another condition was that it had to sell at least 40% of its shares to approved buyers in a move to broaden empowerment.

While Nexus has 60 days as of the minister`s announcement to meet the requirements, the regulator had hoped it would not use the full period and allow the process to move ahead faster. That, however, may not be possible.

"In all instances where you find funders they are going to want to know what they are funding, and that picture is not yet complete [without the selection of the 51% owner]," says Nexus head Kennedy Memani.

He remains confident that the money or guarantees can be raised, but says doing so immediately could prove impossible, while ICASA had hoped to have the matter concluded within a matter of weeks.

Nexus is to meet ICASA soon to discuss the conditions.