Confusion surrounds the sale of Transcell after Stella Sigcau stepped in to prevent the deal taking place, reports Max Gebhardt
Privatisation has been dealt yet another blow following the intervention by the Minister of Public Enterprises, Stella Sigcau, in the proposed sale of Transnet’s loss-making cellular phone division to MTN.
A ministry representative issued a terse statement saying that any sale of Transtel Cellular’s (Transcell) subscriber base would have to be done in consultation with both Sigcau’s office and Jay Naidoo’s ministry of post, Broadcasting and Telecommunications.
“Such a transaction cannot go ahead without consultation with the relevant ministries as it impacts on the government’s telecommunication plans,” the ministry said.
Earlier this week it was reported that MTN and Transnet had been involved in secret negotiations to discuss the possible sale of Transcell’s subscriber data base. Transtel, which made a net loss of R68- million last year, would have sold its R82- million loss-making service provider Transcell. However, this is now unlikely to occur.
The cellular company has been plagued by a high rate of bad debt, fraud and material losses. Part of the sale would have seen the company outsourcing some of its crucial functions.
Transcell, which is in its second year of operation, has a subscriber base of 22 000, making it the second-largest MTN service provider.
Market sources say the deal was being concluded by MTN on behalf of its subsidiary M-Cell, which manages billing accounts and had decided to enter negotiations with Transcell over taking control of its billing operations.
This did not mean it would be purchasing Transcell, as the subscribers would still be managed by the company.
Jacques Sellschop, group executive of corporate relations at MTN, said that at no time did the company feel uncomfortable about any discussion it was having with one of its shareholders – Transtel owns 20% of MTN – about one of its exclusive service providers.
“We believe it is the prerogative of Transtel to determine the nature and extent of any national framework agreement-related (NFA) constraints, which may be perceived to affect commercial strategies in respect of Transtel Cellular,” he said.
Connie Molusi, representative for Naidoo’s office, disagreed. “All telecommunication interests that are owned by the government are guided by the Ministry of Post, Broadcasting and Telecommunications.”
This is not the first time that plans for the sale of the loss-making cellular- service provider have emerged. Early last year Transnet said that Transcell had been recommended for sale in terms of a working document on Transtel’s future business plans. The sale was placed on hold as any recommendations would have to have been sanctioned by Sigcau.
This latest battle appears to have been a result of the unions not being consulted over plans for Transcell. The proposed sale caught the unions off guard, said one source. At no stage had the sale been discussed with them in terms of the NFA – an agreement between the government and labour on the restructuring of state assets.
This seems to be at odds with statements by Transnet managing director Saki Macozoma that any sales could go ahead only after full consultation with the unions.
Molusi said that the two relevant ministers would be meeting Transnet managers as soon as possible to discuss the proposed sale of Transcell.
Sources close to the deal within the parastatal expressed surprise at the furore that has developed around the proposed deal with MTN. They said that at the end of the day this was just another business deal.
They said that staff had been aware of the process throughout the discussion.
The deal had been misinterpreted, but, according to the source, this was common these days in the parastatal.
Transnet chair Louise Tager was not willing to comment on the proposed deal and referred all inquiries to Macozoma, who could not be reached at the time of going to press.
The Ministry of Public Enterprises has been under siege in the past few weeks from the unions as the privatisation process speeds up.
Sigcau this week resolved a two-week-long boycott by the National Union of Mineworkers and the National Union of Metalworkers of South Africa of talks on the restructuring of Eskom.
The unions accused Eskom management of attempting to privatise some of its operations without consultation. They alleged that they had not been consulted on plans to sell off three mothballed power stations, or on a joint information technology venture with IBM.
After a lengthy round of negotiations, the minister eventually persuaded the unions to return to the restructuring and transformation committee. The parties said they had agreed to revitalise the transformation committee.