Date: 26/08/2004
Source: Ministry of Communications
Title: I Matsepe-Casaburri: Granting of licence to SNO


DECISION OF DR. IVY MATSEPE-CASABURRI, MINISTER OF COMMUNICATIONS, ON THE GRANTING OF A LICENCE TO THE SECOND NATIONAL OPERATOR, 26 August 2004

We started the process of managed liberalization of the telecommunications market in the Telecommunications Amendment Act that provided for the licensing of the Second National Operator.

This was part of the implementation of our policy aimed at the reduction of telecommunications costs by introducing competition, providing choice and increasing access to telecommunications infrastructure and services to the public.

The first phase was not successful and a second process was started at the beginning of last year.

In his State of the Nation Address this year, the President indicated that we would be finalising the decision on the SNO soon. In my budget speech in June I committed to announcing my decision in August.

Protracted discussions regarding the SNO have been taking place for some six months. One of the parties initiated litigation proceedings.

Following on-going interaction with all of the stakeholders in the SNO, I applied my mind to the concerns all the parties raised and, where appropriate, made some adjustments to my initial proposals to them.

I am now satisfied that I have adequately taken into account their concerns without prejudicing the public interest and, accordingly, have decided as follows:

To grant, on Friday 17 SEPTEMBER 2004, to the Second National Operator (SNO) comprising Nexus Connexion Pty, Transtel, Esitel, WIP Investments Nine Pty Ltd trading as CommuniTel, Two Telecom Consortium Pty Ltd, and the remaining un-allocated equity shareholder, a licence to provide public switched telecommunication services in the Republic of South Africa, subject to the following conditions:

* Acceptance of the shareholding and control structure of the SNO
* Finalisation of and agreement on the Business Plan
* Finalisation of the Shareholders' and Subscription Agreements

The structure of the SNO would be as follows:

i. A new company, SepCo, will be incorporated which will hold 51% of the equity share capital of the SNO
ii. Control of SepCo will be held by a new financial investor, which will have a 51% shareholding in SepCo. WIP Investments Nine (Proprietary) Limited trading as CommuniTel and Two Telecom Consortium (Proprietary) Limited will each hold 24.5% of SepCo;
iii. Transtel and Esitel will together hold 30% of the equity share capital of the SNO;
iv. Nexus will hold 19% of the equity share capital of the SNO;
v. The new financial investor will control the board of SepCo;
vi. SepCo will control the board of the SNO

The Independent Communications Authority of South Africa (ICASA) will now manage the integration of the SNO Company and the finalisation of the licensing process.

I will continue with the process of selecting a suitable investor for the un-allocated equity.

I would like to thank ICASA for the part that they played in this process.

Issued by: Ministry of Communications
26 August 2004