Tele­coms ten­ta­cles tighten

New Gov­ern­ment, same ol’ slow lib­er­al­i­sa­tion. Or could it get even worse?

Finweek English Edition - - Communication & Technology - BELINDA AN­DER­SON

FEW AN­TIC­I­PATE South Africa’s new po­lit­i­cal regime will her­ald any sig­nif­i­cant changes in telecom­mu­ni­ca­tions pol­icy. In fact, some be­lieve the postMbeki regime could adopt an even more in­ter­ven­tion­ist stance. Africa Anal­y­sis tele­coms an­a­lyst Dobek Pa­ter says while the Kgalema Mot­lanthe/Ja­cob Zuma regime may have more so­cial­ist lean­ings, tele­coms pol­icy is al­ready con­ser­va­tive and the pace of lib­er­al­i­sa­tion slow. So Pa­ter ex­pects to see more of the same.

That view is re­in­forced by the re­cent de­ci­sion by Com­mu­ni­ca­tions Min­is­ter Ivy Mat­sepeCasaburri – who sur­pris­ingly out­lasted the Mbeki-era but isn’t ex­pected to form part of the post-elec­tion Cab­i­net – to ap­peal the High Court rul­ing that found in favour of Al­tech, giv­ing val­ueadded net­work ser­vice providers ( Vans) the right to self-pro­vide.

That pos­i­tive rul­ing had in­stilled a new op­ti­mism among sec­tor par­tic­i­pants, as it upped the pace of lib­er­al­i­sa­tion overnight but which Mat­sepeCasaburri quickly culled.

Pa­ter says the ap­peal was in­dica­tive Gov­ern­ment was try­ing to play a greater role than di­lut­ing its pow­ers and pass­ing th­ese on to reg­u­la­tor Icasa and the mar­ket. Few an­a­lysts were sur­prised by her de­ci­sion but most were dis­ap­pointed and are root­ing for the ap­peal to fail.

Ka­plan Eq­uity An­a­lysts’ MD Irnest Ka­plan says whether Vans can or can’t self-pro­vide isn’t a ma­jor is­sue. More im­por­tant is the spirit with re­gard to the whole lib­er­al­i­sa­tion process: the ap­peal rep­re­sents a back­lash against faster lib­er­al­i­sa­tion. Ka­plan is con­cerned about the mes­sage the con­tin­ued un­cer­tainty sends to for­eign in­vestors.

Gart­ner prin­ci­pal an­a­lyst Will Hahn says al­though he hadn’t ex­pected the rul­ing would lead to hun­dreds of new op­er­a­tors, it was more about dan­gling a carrot. “If play­ers can build their own net­works it’s a way to bring the op­er­a­tors to the ta­ble to ne­go­ti­ate.”

Hahn says there was a “great deal of dis­ap­point­ment” at the min­is­ter’s de­ci­sion. He says SA’s tele­coms sec­tor is over-reg­u­lated and, in ad­di­tion, there’s a long, drawn-out lit­i­ga­tion process. Tele­coms is an en­abler of eco­nomic growth, so what­ever the Com­mu­ni­ca­tions Min­istry can do to “clear the fog” cur­rently hang­ing over the mar­ket would be good for the play­ers, in­vestors and con­sumers.

But more im­por­tantly for Hahn than any change in gov­ern­ment or min­is­ters is the fact that African tele­coms regimes have agreed to an open ac­cess model for the var­i­ous sub­ma­rine op­tic fi­bre ca­ble projects. That, plus the fact SA has un­der­taken to host the 2010 Soc­cer World Cup – a “can’t fail” project – points to pos­i­tive changes ahead.

BMI-Tech MD De­nis Smit ex­pects to see in­creased Gov­ern­ment par­tic­i­pa­tion in the tele­coms sec­tor – prob­a­bly through pro­vin­cial and mu­nic­i­pal broad­band net­works. But as long as such projects go ahead with pri­vate sec­tor par­tic­i­pa­tion, there’s no rea­son they can’t suc­ceed, he says.

Al­though the Com­mu­ni­ca­tions Min­is­ter kept her job, an­other key min­istry in the tele­coms sec­tor, the Depart­ment of Pub­lic En­ter­prises, saw In­fraco pi­o­neer Alec Er­win step­ping down and be­ing re­placed by Brigitte Mabandla. But few an­tic­i­pate Gov­ern­ment would change its stance on In­fraco.

Smit says he be­lieves In­fraco is ac­tu­ally a pos­i­tive in­ter­ven­tion, as it should release the bot­tle­neck in get­ting band­width ca­pac­ity from un­der­sea ca­bles land­ing in SA – of which there will soon be a num­ber – up to Jo­han­nes­burg.

While Gov­ern­ment’s stance on some telco as­sets is un­der­stood, its re­la­tion­ship with Telkom is murkier – mired in the con­flict of in­ter­est of profit max­imi­sa­tion ver­sus bring­ing down prices.

Word has it the Mbeki Cab­i­net signed off on Telkom’s pro­posed sale of its 50% stake in Vo­da­com to Voda­fone. It’s un­clear whether the new regime would ques­tion that as sell­ing off its crown jew­els to for­eign­ers or whether share­hold­ers would ap­prove the deal.

Al­though the al­ter­na­tive prospect – a pro­posal by the Mowana con­sor­tium to merge Telkom’s 50% of Vo­da­com with Nige­ria’s Globa­com – could build a pan-African gi­ant, the jury’s out on its suc­cess. Re­nais­sance Spe­cial­ist Fund Man­agers’ Khulekani Dlamini says cap­i­tal is a dif­fi­cult hur­dle. “Where would they (Mowana) source the cap­i­tal?” Dlamini doesn’t see any ma­jor tele­coms pol­icy changes com­ing from the new Gov­ern­ment. He be­lieves new par­tic­i­pants will jockey for po­si­tions of ben­e­fit, in the same way for­mer par­tic­i­pants such as Andile Ng­caba did. And that could lead to de­lays in im­ple­men­ta­tion.

Great deal of dis­ap­point­ment. Will Hahn

Pol­icy al­ready con­ser­va­tive. Dobek Pa­ter

Cap­i­tal a dif­fi­cult hur­dle. Khulekani Dlamini

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