Beginning of the end for Telkom?

The hunter has become the hunted - and there is much pleasure in knowing Telkom's monopoly could finally lead to its undoing. The big news this week was that Telkom had entered talks with Vodafone and MTN, which the fixed-line giant confirmed in a cautionary to shareholders.

This seems to confirm what the market has been saying for a while now: Telkom is looking to shed its 50% Vodacom stake and could well be considering selling its fixed-line business to MTN.

Now there are a number of reasons for this. In creating Telkom all those years ago, government created a monster that did much harm to the local telecoms sector and hampered economic growth. Ironically, it's this dominant position that is now biting the company on its backside.

As it stands, Telkom will have a hard time competing when something finally happens in the South African telecoms sector. It is certainly having a hard time growing. Consider the group's attempted forays into Africa - not very successful. Its most significant African asset appears to be some obscure Kenyan Internet service provider. Rather laughable compared to the blitzkrieg carried out by MTN and, to some extent Vodacom, on the African continent and beyond.

I think that, frankly, National Treasury is just sick of the Department of Home Affairs and is willing to pay whatever it takes to make it go away.

Martin Czernowalow, news editor, ITWeb

Its attempts at expanding into the converged communications space have also been thwarted by the local competition authorities. The proposed merger with Business Connexion (BCX) was booted out earlier this year, mainly on grounds of market dominance (and it did not really help that the geniuses from Telkom and BCX were caught lying in testimony before the Competition Tribunal either).

This leaves Telkom with few, or no options. Apart from a lack of potentially suitable IT services partners, it is unlikely the competition authorities would approve any merger involving the dominant telecoms player. Hey, it must suck being a monopoly now!

So, not many people are likely to cry about Telkom getting a beating. And maybe, with the demise of this monstrosity and government's exit from the telecoms industry, the world will become a better place.

But, hang on, didn't government just set up Infraco? I guess we're still screwed.

Sources revealed this week that the arivia.kom deal may just have become slightly less lucrative for potential buyers. By about R1.5 billion, give or take.

Government initially wanted to make the sale of the ailing state-owned IT outsourcer more attractive by throwing in two large outsourcing contracts with Eskom and Transnet. The five-year contracts are worth around R400 million and R200 million a year for Eskom and Transnet, respectively. It was initially said the latter could be boosted by the inclusion of services for the National Ports Authority (NPA), which would have added a further R300 million a year.

However, the five short-listed bidders were recently informed the NPA component will not form part of the deal, but could constitute "future business", sources close to the sale say.

Sadly, arivia shareholders Transnet and Eskom are still cagey on any specifics around arivia. A source close to the process says bidders still have no idea what arivia is worth, what its state of health is, or the future of its other outsourcing contracts. As has been the case since the start of the process, government is keeping mum. Nice way to ensure buyers will be willing to pay top-dollar.

Then again, I venture to say that perhaps government has no idea either. After all, someone would have to read a report or two, maybe look at some financial statements... that could cut into lunchtime.

Finally, a bold move to sort out the cesspool that is the Department of Home Affairs. Home Affairs director-general Mavuso Msimang this week announced that National Treasury has effectively given the department a blank cheque to fix its IT infrastructure. That's a radical move.

I think that, frankly, National Treasury is just sick of the Department of Home Affairs and is willing to pay whatever it takes to make it go away.

So, Msimang proceeded to announce a "massive" investment in IT to rescue the department, and it has been revealed this bill could come to about R2 billion. I hope Msimang has included his therapist's bill in this; after all, the Department of Home Affairs can break a man.

As SA waits with bated breath for the Independent Communications Authority of SA (ICASA) to finally start dishing out WiMax spectrum, some have predicted telecoms operators could come to blows over the way it's done.

A small telecoms operator says ICASA's allocation criteria is likely to be challenged, as many operators need the spectrum and argue they can use it more effectively. This is one company that is ready to challenge ICASA's decision if it loses out.

It has also been suggested telecoms operators will pick on each other, repeatedly reporting each other to ICASA for alleged infractions. Now, I'm not sure whether this is a healthy environment, but it should be fun to watch.

Sadly, this shows local operators have no faith in ICASA (can't think why) to allocate WiMax spectrum fairly or sensibly.

On the other hand, BMI-TechKnowledge senior analyst Richard Hurst predicts more of a cold war scenario, with few blows actually being thrown.

"Maybe it won't be much of a war, and we won't come to blows, but we will get huffy."

Well, huffy is cool and all, but it would have been much more entertaining to see telecoms operators actually bitch-slapping each other. Maybe someone could then bitch-slap ICASA while they're at it. Hey, we live in hope.