For the telecoms industry to reach the level of liberalisation that government intends, it is imperative that Telkom`s initial public offering (IPO) happens quickly, says Edwin Thompson, regulatory director of UUNet SA.
Speaking at the Tel.Com Africa 2002 conference in Sandton yesterday, Thompson said that if Telkom`s listing on the JSE takes place, it will leave the state with a share of about 50% of the telecoms industry, through its stakes in Telkom, Sentech and Transtel, which will be part of the second national operator (SNO).
"However, if the IPO fails to take place for whatever reason, we will see little significant liberalisation within the sector, as the state will still maintain too much of a majority shareholding for the industry to be considered open."
Thompson, who is also joint chairman of the Internet Service Providers` Association, believes Telkom will still hold an 80% share of the market within the next three years, with the SNO holding about 15% and Sentech the remaining 5%.
"I know that several licences are to be awarded for operators in underserviced areas, but as these are so small I don`t see them having an impact on the market to any significant degree," said Thompson.
"Of course, in order for the SNO to achieve the projected 15% share of the market, the elusive foreign equity partner will have to be found. Hopefully we will get clarity on this issue from the relevant parties as we move forward."
He believes the R7 billion investment that the foreign partner will be required to make, in order to effectively compete with Telkom, could have something to do with the present lack of bidders for the SNO licence.
"A R7 billion investment in a 51% share of what is likely to be 15% of the total market will leave the foreign partner with between 7% and 8% of the total market for their money. However, were they to invest R7 billion in buying Telkom shares when the IPO occurs, they could find themselves with closer to a 16% share of the market, which is twice what they`d have if they invested in the SNO. It`s not hard to understand why there`s been some reluctance to bid for the licence."
He noted that the VANS and ISP sectors are already fairly liberalised, but to maintain competition in this sector, effective regulatory protection will be necessary. This protection will cover issues like equal access to services, service delivery, service quality and service price.
"Liberalisation of the industry will require an efficient, well-funded, effective and respected regulatory environment," said Thompson. "What is needed is for the regulatory body to keep things simple and to only regulate issues that inconvenience uninvolved parties. We don`t need them to regulate services, as this inevitably stifles innovation."
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