R/€ = 14.90
R/$ = 10.73
Au 1339.50 $/oz
Pt 1482.00 $/oz
Jul 05, 2002
R1bn SNO investment poised for take-offBack
Econet Wireless|Eskom|Eskom Enterprises|Lesotho Telecommunications|Siemens|Siemens Information And Communications|Siemens Information AndnCommunications|Siemens Telecommunications|Lesotho|Nigeria|South Africa|Network Operator|Private Networks|Telecommunications|Telecommunications Infrastructure|Telephone Facilities|Alwyn Martin|Transtel|Vusi Ngubeni|Fibre Optic
© Reuse this With a R1-billion investment, 30% shareholders to the second network operator (SNO) Eskom and Transtel have completed the infrastructure, which includes fibre optics and switching for the SNO to begin operating.
Eskom Enterprises executive director Vusi Ngubeni says that the Eskom/Transtel partnership will invest a further R1-billion into the SNO to boost a smooth take-off when it begins operations.
The investment excludes previous investments in telecommunications on private networks.
For the first time, Telkom will be facing competition from a rival and this will be the harbinger of many interesting developments as, for the first time in South Africa, there will no longer be a monopoly.
Ngubeni says that the SNO will focus on improving services in the rural areas by investing more in these areas, where more than 70% of the population currently does not have access to telecommunications.
"We would like to see more people in rural areas have access to telecommunications for educational, business and training purposes," he says.
He explains that the SNO will improve services and will provide the South African public with an opportunity of choice, thus providing more bandwidth than currently available.
Ngubeni insists that Eskom Enterprises telecommunications infrastructure is already placed throughout the country both in rural and urban areas.
However, he is quick to point out that the extension of the announcement of the 19% black-empowerment entity and the 51% private entity has allowed the present incumbent to lock business by entering into long-term contracts with customers.
The announcement of the company that would have a controlling stake in the SNO was expected in May, but will now only be announced in October, thus extending Telkom's monopoly for a further five months.
"Consequently, the delay creates a barrier to entry for the SNO and provides the incumbent with an advantage to lock up business," bemoans Ngubeni.
He has appealed to the Independent Communications Authority of South Africa (Icasa) to speed up the process or, alternatively, issue a preliminary licence to Transtel, Eskom and a black economic empowerment entity to begin operations.
"We were geared for the May announcements as investments were already in place, hence there is a need to begin sweating the assets," he elaborates.
Ngubeni is optimistic that the SNO will provide quality services, avail customers with a choice of service provider and provide telephone facilities on demand as opposed to so-called begging, noting that it will not force its customers to sign long-term contracts.
There has been scepticism from certain sources who believe that what happened with the cellular phone market, with Vodacom and MTN benefiting from keeping prices artificially high, will occur in this instance, with a duopoly simply replacing the current monopoly.
Nevertheless, Ngubeni states that duopoly is not the best form of competition, but can be viewed as a start to the move towards competition.
He observes that it is a natural process to first institute a duopoly and then liberalise the market fully later, adding that prices drop due to declines in the number of people using the services as they would be shared between the two service providers.
He notes that there is added value to services when they are available and cost-competitive.
Further, Ngubeni believes that to slowly build up a customer base depends on how fast and stable business areas are developed.
Nevertheless, he cautions that there is a need to create a steady balance between commercial business and social responsibility, hence the SNO will work on this policy by investing in the upliftment of rural areas.
Commenting on the ability of Eskom and its partner Transtel to sustain the SNO, Ngubeni boasts that the two firms have experience in telecommunications.
Furthermore, Eskom Enterprises and Siemens Information and Communications group have signed a R400-million contract for the roll-out of Eskom Enterprises' fibre optic network infrastructure.
The fibre optic network together with Eskom Enterprises' existing private telecommunications network infrastructure will create the platform for Eskom's participation in the SNO.
Fibre optic cable is already being deployed on the existing Eskom power-line infrastructure. The purpose of this contract is to procure, install and commission the additional telecommunications equipment necessary to complete the desired Next Generation Network solution. Network rollout began in January and was completed by the end of April, in time to connect the first customers shortly after the liberalisation of the fixed tele- communications network.
"Our joint vision is to provide innovative telecommunications solutions and premium customer services for the SNO," says Siemens Telecommunications CEO Alwyn Martin. He explained that Siemens began preparing for deregulation of South Africa's telecoms industry in the mid-90s. Ngubeni explains that Siemens was chosen by Eskom Enterprises over its competitors because of its integrated technology offering, its strong regional presence in South Africa and on the African continent, and its comprehensive telecommunications business solution ability. Currently, Eskom Enterprises, in partnership with Econet Wireless, owns 70% of Lesotho Telecommunications.
After a year of operations in Lesotho, the firm was granted a licence in mobile phones and launched Econet EZI-Cel in May this year.
With the current 10 000 cellphone subscribers in Lesotho, the firm is close to reaching its first-year target of 12 000 subscribers.
In Nigeria, it is also involved in a 50:50 joint venture with NEPA for the fixed-line telecommunications in that country.
Ngubeni believes that electricity and telecommunications work hand-in-hand to enable speedy development of any country.
Edited by: nkolola halwindi© Reuse this Comment Guidelines
Other Electricity News
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...