Date: 31/01/2003
Source: Ministry of Communication
Title: Matsepe-Casaburri: Decision on SNO


MINISTER MATSEPE-CASABURRI's DECISION ON ICASA's RECOMMENDATIONS ON THE 51% EQUITY STAKE APPLICATIONS FOR THE SECOND NATIONAL OPERATOR (SNO)

The process of managed liberalisation of the telecommunications sector started in the earnest after the Cabinet decision in January 2001.

To implement this decision we introduced the Telecommunications Amendment Act to make provision for, among others, the ending of Telkom`s exclusivity and the introduction of competition in a form of the Second National Operator (SNO).

The process has not been smooth as competing interests came to the fore in an attempt to gain ascendancy over one another, but in the end a good piece of legislation was introduced.

We proceeded with the implementation of the law in the midst of global economic downturn especially in the telecommunications sector. The situation was further worsened by recent corporate scams that rocked some of the major players in the sector.

In advancing the objectives of this policy my department visited several countries in South East Asia and Europe in an effort to get international investors to seize the new business opportunities.

Unlike the local BEE sector the response from international investors and operators has not been great mainly due to the reasons I have highlighted.

This is evidenced by the number and quality of bids ICASA received on the 51% equity stake in the SNO. I have since studied the bids and subsequent recommendations made by Icasa.

The first recommendation of Icasa was that neither of the two applications be awarded the 51 % stake in the SNO. I concur with their position not to award the stake to any of the bidders.

With regard to other recommendations dealing with the process after this stage I wish to point out that I will exercise my powers as contained in Section 35 A (a) of the Telecommunications Act of 1996 as amended which reads as follows:

"Notwithstanding sections 34 and 35 - in the case of a license referred to in section 34 (2), the Minister may in specific instances determine the manner in which applications may be made, such as by way of auction to tender or both, and the licensing process and the licensing conditions that will apply."

I will gazette a notice outlining how this process will unfold and I will ensure that this part of the process is as fast as possible to ensure stability in the market.

I have decided to appoint a team of legal and financial advisors to work with me in the implementation process of this alternative. I will establish an SNO Office within the department for the implementation of section 35 A (a).

I will also consult with Transtel, Esitel, Nexus and Icasa to find the best way of introducing competition through this SNO as soon as possible. I would like to assure the industry and consumers that we are committed to the introduction of strong competition and managed liberalization.

I would like to thank Icasa for the transparent work they have done, in particular during the festive season when most of the industry was relaxing or on leave.

Lastly, I would like to thank the bidders for their cooperation and effort.

For further details please contact: Dr Andile Ngcaba, Director-General of Communications on (012) 427-8166 or 082 889 3381
Issued by Dr Ivy Matsepe-Casaburri, Minister of Communications
31 January 2003