/ 1 January 2002

SA’s Telkom sees no rival until October

SOUTH Africa’s state-run telecommunications utility Telkom sees its monopoly continuing for at least another five months as the government grapples with the selection of a competitor.

Telkom’s market exclusivity officially ends on May 7, but Telkom regulatory affairs executive Gabriele Celli said on Thursday the process to license a second national operator was unlikely to be completed before October this year.

The path to competition in the country’s fixed-line market has been troubled. Last year new telecoms policy went through a series of U-turns as industry players fought over whether to allow one or two new Telkom rivals.

Potential investors in a Telkom initial public offering, the country’s biggest planned privatisation which is due by next March, are watching developments in the local industry for signs of the soundness of South African regulations.

Telkom representative Andrew Weldrick said on Thursday further delays in the process of picking a rival would not be entirely to Telkom’s advantage.

”Investors will be looking at further delays and it could have an impact on investor confidence,” he said.

Last month the tortuous path to liberalisation took a bad turn with reports that President Thabo Mbeki had to intervene in a dispute between the industry regulator Icasa and the government’s Department of Communication.

The issue was whether the regulator had the legal authority to decide on an application for an equity stake in a licence or only on an application for a whole licence, the Business Day newspaper reported.

The communications department has split the bid for a second operator’s licence into two: a 19% stake for black-run business and a 51% share for a big, probably foreign, operator.

The rest is being set aside for the telecoms arms of state transport and power utilities Transnet and Eskom. Despite the dispute, Icasa accepted bids from seven black businesses for the 19% stake.

The row raised fears that the rival would not start operating until next year and that it would push back the issuing of an already delayed invitation to foreign operators to participate. – Reuters