SNO ploughs on

By Paul Vecchiatto, ITWeb Cape Town correspondent

Johannesburg, 08 Sept 2004

Some of the second national operator (SNO) members say they plan to forge ahead with their application for a licence, despite admitting they were caught off guard by the market liberalisation.

Telecommunications market observers have said during the past week that the business case for the SNO has been negated by the market liberalisation announcement. Communications minister Ivy Matsepe-Casaburri has, in effect, allowed value-added network services to be public telephone service networks in their own right.

Two weeks ago, the minister stated that the SNO licence would be awarded on 17 September depending on the business plan submitted by the members of the consortium. However, when making that announcement, she gave no indication of the market liberalisation that was to come.

Karl Socikwa, CEO of Transtel, says the announcement has altered the SNO`s business plan in that it was based on the premise of one dominant telecommunications player (Telkom) and then the SNO.

"We will have to go and alter our business plan in time for the awarding of the licence," he says.

Kwame Amuah, CEO of Two Consortium, says the market liberalisation announcement means it is "back to the drawing board" for the SNO business plan.

"Market liberalisation is good for the consumer, but risky for investors and so we have to adapt our plans for the new situation," he says.

Transtel`s CTO, Angus Hay, says his company has already spent a considerable amount of money on upgrading its networks to new-generation network standards that would be able to cater for IP packet services.

"It would not be very easy for a VAN service to suddenly decide to become a fully fledged PTSN. We are far ahead already in developing a national backbone," he says.

However, Hay admits the timing of the market liberalisation announcement was "unfortunate", although he welcomed the move.

Amuah says despite the liberalisation announcement, the SNO still believes it has the edge over other potential competition.

"We have the technology and the funding," he says.

Socikwa says the members of the SNO will meet with the Department of Communications later this week to finalise the logistics for the presentation of the business plan in order to meet the 17 September deadline.

Meanwhile, one of the SNO consortium members, Nexus, has reserved its right to restart a court action it instituted against the minister of communications relating to the decision to grant 26% stakes to both CommuniTel and Two Consortium.

Nexus does not plan to issue a statement until later this week and a spokesperson says the company is "considering its options, but is still very committed to the SNO".