SNO 'stopped in its tracks` by infighting

Johannesburg, 17 Mar 2004

Nexus Connexion chairman Kennedy Memani has blasted the 13% shareholders in the second national operator (SNO), claiming they are seeking to control the entity, despite having such a small shareholding.

Both Two Consortium and CommuniTel, which initially hoped to be the 51% strategic equity partner in the SNO, were granted a 13% share by minister Ivy Matsepe-Casaburri, with the remaining 25% warehoused at present.

The other shareholders are Nexus with 19% and the state-owned enterprises (SOEs) of Transtel and Esi-Tel (part of Eskom Enterprises), which each hold a 15% share.

Memani claims that the two bidders are holding the SNO to ransom because they wish to have control of the entity, but the fact that both the minister and the regulator refused to award them the full 51% proves they don`t have the leadership ability to run the SNO.

"We are totally opposed to these guys trying to take control of the SNO - we refuse to be led by people who are mediocre. It is not good for the long-term future of the entity and it is making a mess of the entire process," he says.

"In fact, there is such chaos within the SNO that one of Two Consortium`s shareholders, TMP from Norway, has withdrawn from its role, as it fears that the problems with the SNO as it stands could affect its international brand."

Asked whether he felt that the problems might be solved if the government were to find an organisation to take the warehoused 25% share, he says "the real problem is that there is no one out there who would be willing to take a 25% shareholding in this mess".

Point of no return

He believes there are still too many exit options for the players within the SNO, as they are not currently bound by any terms, since the consortiums have refused to sign a memorandum of understanding (MOU) which would have been a point of no return for all concerned.

"Once we had all signed an MOU, the process would have been able to move to the next level, but the consortiums have not done this, and we have to ask why?

"Nexus has already made a lot of compromises in the spirit of negotiation and in the interests of getting the process moving, but these guys are refusing to budge," says Memani.

"Peter Archer [CEO at CommuniTel] believes he has the Department of Communications wrapped around his finger, which is why he expects his company should control the SNO, but we consider this to be an insult to our intelligence."

He says the consortiums are only looking for management contracts and short-term bonuses and Nexus does not believe this should be allowed.

"We should not be giving away the nation`s assets [referring to the SOEs` network] to fly-by-night foreign operators, as such assets should belong to the people of SA. Foreign operators are only in it for the short-term," states Memani.

'Not the bad guys`

Memani says Nexus is making these statements to make the public aware of why there is still no SNO, even though it is nearly three years since a rival to Telkom was supposed to be up and running.

"For too long we have been blamed for the delays in the process, but we are not the bad guys here. We understand that the public will be unhappy about this news, but they must realise that it`s a massive frustration for us too.

"However, we will continue to meet with the other parties and we hope these meetings will be fruitful, although I do not hold out too much hope."

Asked about his breaking ranks, after the interim SNO board had decided that Transtel`s Karl Socikwa would be the only one to speak about the SNO, Memani claims there is no interim board - only a bunch of different shareholders busy negotiating.

"As far as we are concerned, we are Nexus and we will speak when we want. Once the MOU has been signed and we are part of a single entity, then we will abide by that entity`s rules," he says.

Softening his criticisms slightly, he states: "While things do look at bad at the moment, Nexus is taking a long-term view and we still believe that, as long as the parties can sort out these divisive issues, the SNO will still be a good investment. One way or the other, we will be here for the long haul."

'Official position`

The consortiums that hold the 13% shares refused to comment, except to say they abide by SNO rules and thus expect Socikwa to make any statements on their behalf.

According to Socikwa, the SNO`s official position is that everything is on track and progress is being made.

"We have been in discussions with government regarding the documentation they need from us before they can award the licence, and all the shareholders have come to the party in this regard, so as far as I am concerned, there has been a good working relationship over the past few weeks," says Socikwa.

"While I believe individual shareholders should have the right to lobby for the unallocated 25% in their own ways, I was taken aback by the reports I have read in the press of the Nexus statement. While the shareholders may have some differing views on how best to do things, that does not mean the process has stalled."

He says that whatever statements Memani has made, they are not the official view of the SNO board, and that he (Socikwa) remains the only official spokesman for the entity.

"We have delivered the documentation government requires and have received indications from them that they hope to have the licence issue finalised as soon as is practically possible," he says.