Both second national operator (SNO) bidders have criticised Next Generation Consortium`s report to the Independent Communications Authority of SA (ICASA). The report pointed out shortcomings in the Two Consortium and CommuniTel bids in respect of the 51% equity stake in the SNO licence.
Yesterday, both consortiums had muted responses, saying there had been "misunderstandings between what was said and what was construed by the report" and "there are certain areas where we disagree with what they have said".
Today, Two Consortium released a scathing answer to the Next Generation report, saying that - while it is tabled in a framework of legitimacy - it is characterised by bias.
"We are extremely concerned about the way the report slams both bidders for 'inadequate funding`, 'lack of experience` and 'over-reliance on consultants`, among other issues, and in reaching a conclusion that neither bidder is appropriately equipped to be awarded the licence," says Two`s Mike Nahon.
"Use is made of selective quotations from the public hearings, sweeping assumptions and conclusions about the financial investments required for the business are made and it mysteriously ignores those fundamentally sound and innovative strategies contained in the proposals, which will see the SNO target underserved markets."
He says one major concern is that a false impression of the relationship between Two and MTN is created, as the report fails to note that Two intends to target the underserved residential market through innovative use of GSM technology, allowing the user to make calls on a mobile handset in their home zone at reduced tariffs.
"The report creates a false impression of undue reliance on MTN. While MTN does have significant value to add to the SNO, and Two and MTN have developed a common understanding of the strategies to target the marketplace, to suggest that we will be uncompetitive if an agreement is not concluded with MTN is both fallacious and disingenuous," says Nahon.
"Next Generation also makes sweeping assumptions around the value of the existing investments by the state-owned enterprises (SOEs), elaborating and sketching scenarios which are highly speculative in order to reach a conclusion."
Nahon says the report sets out two "hypothetical values" for the SOE assets, being R1.5 billion and R3 billion, and the statement is then made that the value must be viewed as equity. From this, an incorrect conclusion is drawn that the proposed equity contributions of both bidders is therefore insufficient.
"It is quite apparent that very little regard has been taken of the substance of the proposal made by Two to ICASA. Extensive reliance is placed upon selective quotes made in the public hearings and nasty inferences are made from there.
"These are then used to discredit the enormous work that has gone into the preparation of the proposal," he says.
Two`s response says one could be forgiven for deducing that there are other forces at play which have an agenda directly in conflict with that of the communication ministry, which is to ensure that the SNO is best placed to compete against Telkom.
"We believe that the ministry of communications is correct in seeking an international partner and it is hoped that sense will prevail and the consultants` report will be 'taken from whence it comes`," says Nahon.
"The conclusions reached in the report are incorrect. They rely on assumptions that the compilers are not entitled to make, while elements of bias, malice and factual inaccuracy permeate the document. Hence we feel that the report in its entirety should be set aside."
Nahon says Two is preparing a detailed response to ICASA in which it will address the above and many other issues in this report in much greater detail. This will be submitted by the due date of 19 August.
Related stories:
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SA SNO bidder signs deal with Ghana SNO
Two Consortium clarifies equity position
SNO equity increase 'not a marriage proposal`
MTN hedges its SNO bets
SNO stakeholders question bids
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