New life has been breathed into plans for a second fixed-line telephone operator, and cellphone users have good reason to look forward to an upgraded service.
This week the Ministry of Communications referred two bidders for the majority stake in the second national operator to the Independent Communications Authority of South Africa (Icasa), and proposed to upgrade the cellphone frequency spectrum.
The introduction of the second operator appeared to be in disarray when Minister of Communications Ivy Matsepe-Casaburri put the process under direct government control by establishing a committee to review bidders. The committee was established after Icasa recommended the rejection of bids by Goldleaf and Optis that were on the table at the time.
This week, Matsepe-Casaburri referred CommuniTel and Two Consortium to the regulator to scrutinise the merits of their economic and social goals. The regulator will choose a winning bidder.
The project manager at Icasa, Siyabonga Madyibi, said he expected a communiqué from the minister by Friday and that the selection would be concluded in three weeks.
At the time of rejecting the Goldleaf and Optis bids, Icasa chairperson Mandla Langa warned against secrecy, or perceived secrecy, in the selection process.
This week, however, Langa expressed satisfaction at the progress made and voiced confidence that the outcome would bear Icasa’s “hallmark” of integrity.
Icasa previously recommended the option of allowing the Transtel and Esitel subsidiaries, of Transnet and Eskom respectively, and joint 30% shareholders in the new entity, to establish the operator with empowerment partner Nexus and warehouse the majority stake to be sold at a later stage. Nexus holds 19%.
Having invested more than R2-billion in the project, Transtel and Esitel favoured the move. The government’s reluctance to pursue this route stems from a wariness “about sending conflicting signals” to the market, since it also has a stake in Telkom.
This week, a leading telecoms analyst expressed confidence that “there is a realistic chance that we will launch a viable [second operator]”. The analyst, who asked to remain anonymous, pointed to the government’s willingness to stick to its deadlines in finalising the bids and to the “significantly improved quality of both bids”.
In a dramatic turn of events, two companies, Detecon and T-Systems, switched allegiances from China Telecom, with which they had formed a separate bid, to CommuniTel. The move is seen to have strengthened the CommuniTel’s case.
CommuniTel comprises former staff of British Telecom, Umkhonto weSizwe military veterans and local firm Gateway Communications. Its senior staff includes Peter Archer who, according to one analyst, has exposure to more than 18 second operators worldwide.
Two Consortium has in its corner Telenor and Swedtel, with Norwegian and Swedish roots.
Last week, the ministry also announced proposals to upgrade the cellular phone spectrum from the current 900 MHz to 1 800 MHz frequency. The additional bandwidth will allow operators to expand their networks.
Moving to GSM 1 800 MHz will involve moving a range of users already on the spectrum, most notably defence and transport communication systems.
Communications Director General Andile Ngcaba said the move would accommodate the explosion of cellphone users and provide the capacity to handle more data. It would, for instance, make enhanced SMS services possible.
The proposal will be subjected to an inter-departmental examination before being handed to the Cabinet. Ngcaba could not say when it would be finalised.