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Cwele explains Telkom's SA Connect 'designation'

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 25 May 2015
Telkom's designation as the lead agency for SA Connect is based on its extensive fibre network, says telecoms and postal services minister Siyabonga Cwele.
Telkom's designation as the lead agency for SA Connect is based on its extensive fibre network, says telecoms and postal services minister Siyabonga Cwele.

Telecommunications and postal services minister Siyabonga Cwele has explained government's decision to designate Telkom as the lead agency for the SA Connect initiative, stressing the operator has been "designated", but not "appointed".

However, Cwele did not clarify whether a process would eventually be announced to formally appoint a lead partner for the broadband project, but it is clear government is happy with Telkom on the basis of its extensive fibre network.

"Telkom's designation as the lead agency for broadband rollout is based on the investment it has made in rolling out an extensive fibre network, which accounts for 86% of the existing 170 000km of national fibre network.

"The department [of telecommunications and postal services] will be finalising the business case, which will be demonstrating the value for money and the appropriate legal prescripts in designating Telkom as a lead agency in broadband rollout," Cwele said.

In this financial year, government is set to begin with the first phase of broadband rollout in eight rural districts, as part of the SA Connect project, and R200 million has been allocated to kick-start the project. The objective of the project is to roll out scalable broadband infrastructure to connect all government institutions in these districts over the next three years across SA.

But president Jacob Zuma's announcement of Telkom's designation as SA's lead broadband agency for the project earlier this year did not impress the industry, with some saying it will further entrench the company's monopoly.

Strategic asset

The state has in the past made it clear Telkom is a key and strategic asset in its plan to roll out broadband to all by 2020, while the industry has pushed for a market-driven national broadband plan that is not dominated by the state's incumbent fixed-line operator.

The Telkom announcement, however, prompted industry observers to raise the question of the obligatory tender process, which was not followed in this case, with the Democratic Alliance saying it could get legal opinion on the move.

Speaking to media recently, Cwele revealed Telkom's advantage became clear when the department, along with National Treasury, mandated the Centre for Scientific and Industrial Research and an unspecified accounting firm to map infrastructure.

"It became quite clear that we have about 170 000km of cable - that is what people have declared openly up to now, but we believe it is more - 86% of that fibre belongs to Telkom, that is the reality," Cwele said.

"So that is what informed, partly, the decision to designate and say this is the lead agency. There is the infrastructure there, but we are not sure how much they are going to charge us and all those things. It is an agency in which we have got interest as the state, but it is also partly owned by the private sector, but it is an agency also which has got the largest capacity and skills for the rollout."

Urgent project

Cwele pointed out Telkom has committed most of its R5 billion capital budget towards reaching more areas and to upgrade technology as part of its contribution to the implementation of SA Connect. "Broadband rollout is a huge, but urgent project, which must not be delayed if we are to remain globally competitive."

While Telkom has been designated the lead agency for the project, Cwele said it would not be the only one. However, he did not clarify whether a tender process would be announced later to appoint a lead partner for the project.

Meanwhile, deputy telecommunications and postal services minister Hlengiwe Mkhize on Friday stated, while the eight rural municipalities would be connected over the next three years, Telkom could not do it alone.

She stated a tender process would be announced in each municipality to appoint implementation partners for Telkom.

Government is currently finalising the business case and funding plan for phase two of broadband rollout for the rest of the country, to be implemented from 2016 until 2020.

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