RECOMMENDATION TO THE MINISTER FOR THE THIRD MOBILE CELLULAR SERVICE LICENCE

Issued by South African Telecommunications Regulatory Authority

29 February 2000

Our purpose today is to announce the Authority’s intended recommendation in terms of section 35 (1) (a) of the Telecommunications Act in respect of the applications for the third mobile cellular telecommunications service licence.

The process that the Authority has followed in arriving at today’s decision is laid down in the Telecommunications Act, No 103 of 1996. A study was conducted by the Authority, into the economic feasibility of providing more than two mobile cellular telecommunications services, in terms of Section 37 (2) (a) of the Act. The results of this study were published in July 1998.

Applications were invited from those interested, for one mobile cellular telecommunications service licence and in response to the invitation the Authority received 9 applications. Of these two applications were withdrawn by the applicants and one application was disqualified.

The Authority notified the public of the applications that had been submitted for consideration for the licence. The applications were open for public inspection except for those parts which were granted a confidential status by the Authority in terms of the procedure outlined at Section 34 (4) (b) of the Act.

Interested persons were given the opportunity to lodge written representations and make oral representations in relation to the applications.

Similarly the proposed licence conditions in terms of section 35 (4) of the Act were published and the public given the opportunity to submit written representations and make oral representations.

Evaluating criteria:

The evaluation criteria for considering the applications for the licence derive from the provisions of the Act, generally the objects set out in section 2 of the Act. In considering the applications due regard was given to applications by persons from historically disadvantaged groups, in accordance with section 35 (3) of the Act.

In accordance with the objects set out in section 2 of the Act and in light of its responsibilities under the Act, the Authority stated in the Government Gazette Notice No. 20090 of May 1999, that the applications would be evaluated under the following main criteria, to which the following weightings were attached:

Business plan and investment strategy - 44%
Empowerment - 25%
Impact on the telecommunications industry and consumers - 7%
Technical plan - 13%
Universal service 11%

In assessing the relative merits of the various applications for the licence, the Authority was required to strike a balance between a number of factors, among them:

• The requirement to take into account all relevant information in exercising its statutory decision making powers
• The need to ensure that all applicants are afforded a fair opportunity to present their cases and to comment on each others applications
• The need to consider not only the information set out in the applications submitted on 14 1999 but also any representations and further information and evidence tendered. And to do so on the basis of reasonableness and fairness to ensure that applicanare evaluated in a balanced and fair manner and in such a way that no applicant is prejudiced.

In considering the applications the Authority was obliged in terms of the Act and the laws of the country to be:

• Independent and impartial in the performance of its functions
• To be transparent and development oriented and
• To perform its functions fairly, equitably and without bias

The evaluation process:

In the first phase of evaluation the Authority identified the strengths and weakness of each application against the evaluation criteria. This process was conducted on an applicant by applicant basis.

The second phase involved an assessment of the relative merits of the applications by awarding scores to each applicant on the individual criteria and on the basis of the weightings allocated to each. This process was conducted on a criterion by criterion basis, rather than on an applicant by applicant basis. This was done to further ensure impartiality.

On the basis of the scores awarded the Authority arrived at a unanimous decision to recommend Cell C as the preferred applicant. The primary reasons why Cell C achieved the highest score are the following:

• The applicant has sound and viable business plan
• The applicants foreign and empowerment partners are likely to be able to provide the financial resources that will be required to implement its business plan
• The empowerment aspect of its application is impressive
• It appears that the applicant will be able, if it were to be awarded the licence, to compete effectively with the incumbent competitors
• The applicant’s ability to compete, which is based, among others, on its sound business plan and its financial strength, means that it is likely to make an ongoing and constructive contribution to the cellular telephony industry
• In particular, it is likely to contribute to the improvement of service provision by competing effectively with the incumbent operators, at the same time, it will contribute to the achievement of Universal Service objectives and create a significant ner of job opportunities. In addition the applicant will contribute to the meaningful empowerment of historically disadvantaged individuals on the basis of financial strength and ability.

The applicants will have 14 days starting tomorrow Wednesday 1 March, to respond to the Authority’s decision, in writing, in terms of the requirements of the Act. The Authority will consider the inputs made by the applicants and make a final recommendation to the Minister by the end of March 2000. Once the Minister has made her decision, SATRA will award the licence.

Contact: Kotli Molise Public Affairs Manager, Communications Department
Tel. 011 321 8284 or 082 824 7078, e.mail Kotli@SATRA.gov.za