Bidders happy with SNO for Christmas

Johannesburg, 19 Dec 2003

The parties involved in the second network operator (SNO) are happy that the licence issue has finally been settled, although they are aware that much work remains to be done.

Yesterday, the Department of Communications (DoC) announced that the two bidding consortiums - CommuniTel and Two Consortium - would be granted 26% equity in the SNO, of which each will hold 13%.

The unallocated 25% equity would remain with government, which will see to it that this portion is warehoused. The Independent Communications Authority of SA (ICASA) will issue the SNO licence to the integrated entity composed of the above consortiums, Esi Tel, Transtel and Nexus Connexion.

"This is really good news for us, as we can now begin to put our assets and people to work. The decision is one that was overdue, but we also understand that government processes do take time," says Dr Enos Banda, CEO of Eskom Enterprises, which owns Esi Tel.

"There are still many issues that need to be sorted out amongst the various parties, including issues such as the business plan and shareholder structure, but we will be working hard on them."

He says that Esi Tel, Transtel and Nexus Connexion have already reached agreement on a number of critical points, which should hopefully help to ease the integration process.

"It is good that the licence has finally been awarded and the DoC must be commended for the good work that was done behind the scenes over the past few months," says Nexus chairman, Kennedy Memani.

"The minister met the deadline she set, but of course with the announcement coming during the holiday season, it has made it more difficult for us to arrange meetings and so on. Nonetheless, we hope to hit the ground running in the new year."

He says that the first step is for the players to set up a timetable in order to get the process of integration underway.

"I really hope that we can all act like businessmen and fellow shareholders and work together for the good of the SNO, our clients and the public."

Mike van den Bergh, a CommuniTel director, says that this is a good first step. "At least this means that we now have a clear understanding of the ownership of the SNO," he says.

"There is still a huge amount of work to be done in terms of the integration process, but at least we now have a good base from which to build, and I believe that the SNO entity will continue to evolve as we move forward."

He says that the announcement represents a 'stake in the ground` that provides a marker from which to begin building the SNO proper.

"People must remember that we`re not coming at this from a standing start. There has been a lot of discussion going on between the various players for some time now, and as we all have a common interest in seeing the SNO succeed, we will hopefully move forward quite quickly."

Dr Kwame Amuah, chairman of Two Consortium, agrees this is a positive occurrence and says next year will prove to be an exciting time in the development of the SNO.

"While we have always maintained that our experience and financial wherewithal meant Two could have done it ourselves, I feel that the way the DoC has awarded the licence is now the best way forward for all parties."

"The SA consumer has been yearning for choice and this is the beginning of a process whereby consumers will at last be offered the choice that they have been seeking."

"Two is committed to this process and we will do all we can to help establish the SNO sooner, rather than later," says Amuah.

According to Esi Tel`s Banda, the aim is to facilitate the speedy establishment of an SNO that will provide a strong alternative to Telkom.

"We will not be entering into a pricing war with them, rather, we plan on competing in terms of our service offering, which has a high level of flexibility and - with two of the biggest corporates in SA in the form of Eskom and Transnet on our books already - we have a strong base from which to begin."

"We have a highly evolved telecoms service available to us and by providing such a service to our customers we plan to create effective competition to the incumbent," says Banda.