Infraco impact yet to be seen

Johannesburg, 12 Dec 2006

While Telkom has already welcomed the introduction of Infraco into the local telecommunications arena, Neotel does not view it as a threat, and Sentech is undecided as to where the new government entity will fit into the landscape.

The announcement of the creation of a telecommunications infrastructure company earlier this year by the Department of Public Enterprises (DPE) was generally well received as it is expected to trim the costs of international connectivity.

Neotel MD Ajay Pandey says Infraco, as an entity, does not yet exist, despite it being granted funding of R647 million by the National Treasury. This, he says, is insufficient funding to take care of the new company's infrastructure environment.

The DPE previously stated Infraco would provide national long-distance and international broadband services, with the aim of reducing pricing to significantly lower levels, as compared to Telkom, within five years.

News of government's intention to create Infraco emerged after public enterprises minister Alec Erwin responded to Parliamentary questions and confirmed his intentions. Speculation surrounding the new company arose after the department cancelled the sale of Eskom's telecommunication assets to Neotel.

No clarity

To date, Pandey says, there is no clarity as to when Infraco will come into existence, or how it will be incorporated. Regardless, Neotel will have access to Eskom's telecommunications assets at commercial rates, says Pandey.

Neotel, which aims to differentiate itself in several areas the company sees as key, including solutions selling, has an agreement with the DPE to have access to Eskom's intercity network, says Pandey.

He adds this network is likely to be housed in Infraco, confirming other such reports.

Consumer benefit

Sentech, however, has yet to fully understand the role that Infraco will play in SA.

Portfolio manager of PR and external communications Dr Pranill Ramchander says that, as the creation of the new entity was only recently announced, the state signals provider still needs to "fully understand the role Infraco will play in the market and what impact it will have on the provisioning of broadband services".

"Obviously, we would also want to explore potential synergies and co-operation with Infraco."

However, Sentech sees the broadband landscape in the next few years becoming more competitive, with consolidation the order of the day.

"One thing is for sure, South Africans will benefit from cheaper and better broadband access in the foreseeable future, especially in view of preparation for the World Cup Soccer in 2010," says Ramchander.