Research and Markets: A 30% Stake In Telkom Was Sold To A Consortium Of SBC Communications And Telekom Malaysia In April 1997, Valuing Telkom At R18,570 Million.

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c50876) has announced the addition of "South Africa Telecommunications Market Intelligence Report" to their offering.

Each extensive Market Intelligence Report includes the following sections: Economic, Social, Political, and Telecoms Indicators; key data presented in tabular form. Regulation; a summary/overview of the market and regulatory climate, followed by synopses of the regulators powers and other competition or ministerial bodies to which it reports or with which it co-operates. A summary of the regulations in force, a list of differences in the types of available licences and a list of the licences issued. Market Indicators; the available data is presented in tabular form with commentary and graphics. Major Operators; contact data and company information, including ownership, background where relevant for pan-European carriers, licensed activities, scope of activities/services, recent major equipment contracts, summary of network status, references to major subsidiaries, joint ventures, and alliances. Major Manufacturers; contact data and company information including ownership, background where relevant, manufacturing & distribution activities, recent major equipment contracts, references to major subsidiaries, joint ventures, and alliances. Industry Associations; contact data and organisation information covering background where relevant, activities/objectives and references to members.

The South African government published a new Convergence Bill, 2005, in February 2005, to provide a licensing and regulatory framework for a converged telecommunications, broadcasting and information technology industry. The legislation defines new categories of licences; sets out rules and guidelines for licence applications, licensee obligations, and the construction of communications networks; provides for interconnection between licensees and facilities leasing by communications network services licensees; provides for a radio frequency plan, a numbering plan to enable number portability in 2005, and carrier pre-selection; specifies type approval and technical standards for communications equipment; and, provides for the Universal Service Agency and Universal Service Fund to continue to bring services to historically disadvantaged people and remote locations.

The new law repealed the Telecommunications Act of November 1996, which provided for: the partial privatisation of incumbent operator Telkom SA Limited; the creation of a new regulatory authority; and, the introduction of a second network operator (SNO) to compete with Telkom, although Telkoms monopoly on certain services (local, long-distance, and international voice services; all facilities used for VANS; and, payphones) was guaranteed for a minimum five-year period (to March 2002) to enable the operator to modernise and expand its network without sacrificing financial resources to compete with other companies.

The Independent Communications Authority of South Africa (ICASA) was established in July 2000, following the merger of the South African Telecommunications Regulatory Authority (SATRA) and the Independent Broadcasting Authority (IBA). ICASA is the main regulatory and licensing authority for South Africa, except with respect to certain specific licences that can only be granted by the Minister of Communications. For these licences, ICASA evaluates the applications and makes recommendations to the minister.

A 30% stake in Telkom was sold to a consortium of SBC Communications and Telekom Malaysia in April 1997, valuing Telkom at R18,570 million. The consortium committed to network rollout and quality of service targets designed to improve quality of service and raise teledensity from 8/100 population at the beginning of 1995 to around 20/100 by the turn of the century, bringing telecommunications services to many areas for the first time. If Telkom met 90% of the targets in the first four years of exclusivity, its monopoly would be extended for a further year, to March 2003. The operator was largely successful in meeting its targets but, following the publication of the governments proposed telecommunications policy in March 2001, decided not to apply for the extra year of exclusivity.

The governments March 2001 proposals provoked comment and criticism from various quarters, and in July 2001 the government revised its proposals, now aiming to license two, not one, fixed network operators to compete with Telkom, to be partnered by state-owned enterprises Eskom (the national power distributor) and Transnet (the transportation group), respectively. The uncertainty concerning the future of the market and widespread opposition delayed not only the licensing of an alternative fixed operator, but also the planned initial public offering (IPO) of Telkom. The IPO was eventually completed in March 2003, raising nearly R4,000 million and reducing the governments holding to 37.7%. During 2004, Telkoms foreign strategic partners sold their interests in the company, leaving 43.0% publicly traded.

The government revised its policy again in November 2001, now proposing to license just one SNO, to be 30%-owned by both Eskom and Transtel, 19% by historically disadvantaged persons, and 51% by other domestic or overseas investors. Although the 19% empowerment stake has been awarded to Nexus Connection, efforts to find a suitable partner(s) for the new company stalled as all applicants failed to meet the requirements. The Minister suggested that the 51% equity stake be "warehoused" until a suitable shareholder(s) and/or investor(s) could be found, and in December 2003 proposed that two of the potential applicants, Communitel and Two Consortium, should each hold a 13% equity stake in the SNO with the remaining 25% to be warehoused for a strategic equity partner. This did not sit well with Nexus, which initiated a court action to prevent the minister awarding the shares to the two companies. Nevertheless, the minister announced that the licence would be granted to the SNO, with Communitel and Two owning 13% stakes, in September 2004. That month, expressions of interest for the remaining 26% stake were invited, and in February 2005 it was announced that Tata Africa Holdings (SA) Pty Ltd, a subsidiary of the Indian conglomerate Tata, would take up the stake. The licence was then expected to be finally awarded in June 2005.

Delays and objections also beset the award of a third cellular licence to compete with MTN and Vodacom (50%-owned by Telkom), which had been awarded 15-year GSM 900 licences in October 1993. After considerable delays, a third cellular licence was awarded to Cell C in June 2001. Cell C launched commercial services in November 2001. Both Vodacom and MTN hold temporary 1800MHz and 3G spectrum licences granted by ICASA pending finalisation of the licence obligations. Vodacom launched 3G services in December 2004.

Topics Covered

* Country background

* Telecommunications regulation

* Communications market indicators

* Market overviews

* Major operators

* Major manufacturers

* Industry associations

Companies Mentioned:

* Telkom SA Limited

* Eskom

* Transtel

* MTN

* Vodacom

For more information, visit http://www.researchandmarkets.com/reports/c50876