News that the second national operator (SNO) licence will be granted on 17 September has been greeted with cautious optimism by telecommunications market observers and participants.
However, none feel the news will have an immediate impact on telecommunications tariffs - the relative high cost of which has been criticised as an inhibitor of economic growth. They also state that despite the two-year delay, the business case for the SNO is still relevant.
Communications minister Ivy Matsepe-Casaburri told Parliament yesterday that the SNO would be granted its licence on 17 September, subject to certain conditions. The consortium would comprise Nexus Connexion, Transtel, Esi-Tel, WIP Investments Nine (trading as CommuniTel), Two Consortium and the remaining unallocated equity shareholder.
A new company, Sepco, would hold 51% of the equity share capital of the SNO. A new investor will hold a 51% share of Sepco, with CommuniTel and Two Consortium each holding 24.5%.
Transtel and Esi-Tel will together hold 30% of the equity share capital of the SNO, and Nexus, the preferred empowerment partner, will hold 19%. The new financial investor would control the board of Sepco, which would in turn control the board of the SNO.
Positive reaction
Independent Democrats member of Parliament Vincent Gore welcomed the news, saying it will at last allow for real competition in the telecommunications market.
"At long last we are beginning to see the end of the turmoil that has plagued the SNO process. We believe the SNO will be an important economic driver as it will be able to implement a new telecommunications network that will be of the latest technology, be able to operate at a lower cost and be easier to maintain."
Gore says it is a given that the SNO will try and "cherry-pick" its high value corporate customers. However, he notes that it will be able to improve the overall tele-density of the country and "lift it from the paltry 12% that it currently is".
"This is excellent news," says Denis Smit, MD of BMI-TechKnowledge. "However, the licence has not been awarded yet. We have had many false hopes in the past."
M-Web CEO Kim Reid says the Internet industry is excited about the news and the more competition there is in the industry, the better it will be for consumers.
"The business case for the SNO most definitely still exists. However, we will be watching closely on how they roll-out the SNO. There will hopefully be a reduction in rates, especially those for overseas Internet connection," Reid says.
Storm MD Tim Wyatt-Gunning says it would be at least another six months before some sign of a limited operational SNO capability is seen.
"They have to sort out the financial arrangements and put in place a management team. Until that is sorted out, very little will happen," he says.
Wyatt-Gunning says government should possibly look at other alternatives to stimulate competition in the market such as voice over IP.
"The SNO is a big project and it will take a long time for it to have a real effect. There are other means to liberalise the market," he says.
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