Issued by: Government Communication Information System
24 May 2002
The finalisation of the legislation has paved way for the managed liberalization of the telecommunication sector. Because of the regulatory certainty that the Act has created, I wish to take this opportunity to announce and present to you the Invitation To Apply (ITA) for the 51% set aside in the Second National Operator (SNO), as well as the draft licence. The two documents that we are presenting to you are the products of our - government, industry, labour, etc- common endeavour as exemplified by the manner in which we worked together in finalizing the policy directives and the legislation.
1. Invitation to Apply
The ITA was published today in the Government Gazette Number 23460 notice number 786.
1.1 This ITA invites foreign and local business including black economic empowerment (BEE) groups to apply for the 51% set aside in the SNO.
Amongst others the ITA seeks to meet the following objectives: attract foreign and domestic investment, spur on economic growth and development; job creation, technological innovation, competition and improve universal service and access.
Applications should be submitted to the Independent Communications Authority of South Africa (ICASA) by 30 August 2002. The successful bidder will be announced this year in December.
1.2 The issuing of the 51% set aside ITA follows:
a) The determination in concurrence with the Minister of Public Enterprises of the equity stake for Transnet and Eskom, which will jointly own 30% of the SNO through their subsidiaries Transtel and Esitel respectively. The parastatals have since indicated their readiness to participate in the SNO.
b) The issuing of the ITA for the 19% black economic empowerment set aside in December 2001. Matters regarding ICASA's recommendation to ensure that the process is litigation proof have been addressed and resolved sufficiently and the regulator is currently busy evaluating the seven qualifying bids received from BEE groups. The successful bidder will be announced in before the closure of applications for the 51% stake. With regard to ICASA's request for the extension of the time frames on the evaluation of the BEE bids, the matter is receiving the necessary attention between ICASA and ourselves.
The conclusion of the process of evaluating the BEE 19% and the 51% stakes will enable us to grant the SNO licence.
2. Draft Licence
During the next few days ICASA will gazette the Draft Licence for public comment. The draft includes the roll out targets.
The simultaneous issuing of the ITA and the draft licence will accelerate the process and also assist potential bidders in developing their business plans. All prospective applicants including BEE 19% stake applicants are welcome to submit their comments to ICASA in respect of this licence.
3. Other matters pertaining to the telecommunications sector
In order to create an environment conducive to economic growth and development, we will also pay attention to the following critical issues:
3.1 Sentech's licence
Sentech's licence to provide international gateway telecommunication services as a carrier of carriers, and multi-media services was issued on 6 May 2002. To ensure that Sentech's operations are consistent with the Act, it is spelt clearly in its licence that Sentech will not be allowed to provide public switched telecommunications services (PSTS), which are a domain of Telkom and the SNO.
At the moment Sentech is preparing itself to implement its new mandate. We expect the company to carry the new responsibilities on its own, as there is no intention to introduce a strategic equity partner at this stage.
3.2 ICASA and Telkom dispute
It is crucial that the licensing of the SNO takes place in an environment that is free from litigation. To achieve this we will continue to encourage ICASA and Telkom to amicably resolve their differences regarding Telkom tariffs in the best interest of the consumers and in the national interest. Addressing this issue as a matter of urgency will also boost investor confidence.
3.3 Implementation of carrier pre-selection
Consistent with the provisions of the Act, it is expected that carrier pre-selection be implemented by 31 December 2003. ICASA is currently conducting public hearings on carrier pre-selection, number portability, inter-connection regulations and others. We encourage all interested parties to participate in this process in order to enrich the deliberations and ultimately the outcome.
Your partnership and continuous support even in circumstances where we disagreed on certain issues, has enabled us to make significant progress in the finalisation and implementation of the Act.
We look forward to working with you in future as we continue to create a sector that responds to the needs of all South Africans.
For those who are participating in the SNO process, we wish them good luck.
Thank You