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ISSUE NO 64 ON THE MONEY

EGYPTIAN INTERNET MARKET "ME-TOOs" ON FREE INTERNET

Last month the leading ISP, LinkdotNet, believed to have the largest subscriber base of Internet users across the nation, announced it would soon be providing free Internet access. The remaining accounts of current link subscribers have been upgraded "to a life-time account," while new subscribers will pay LE99, also for a life-time account. This means subscribers will "only" pay for the time they spend online, which according to LinkdotNet’s CEO Khaled Bishara is LE1 per hour. Link’s announcement was followed a few days later by a similar announcement from MenaNet ISP. It was reported that the national telephone company Telecom Egypt had bought GegaNet, another ISP, to provide the same free internet service.

So how will all those companies make money, people are asking? "The money generated from the time users spend online will be shared by the ISP and Telecom Egypt," is Bishara’s answer. He declined to give the exact percentage of this sharing process.

Microsoft Corporation has teamed up with LinkdotNet to launch the Arab world’s first international web portal.MSN.Arabia.com will come online in September and will carry content in both Arabic and English. LinkdotNet, which says it is the largest private ISP in the region, will develop the content in both Cairo and Dubai.

Both Microsoft and its Egyptian partners say the web portal will provide e-commerce opportunities to small local companies unable to spend lavishly on marketing and advertising. Companies will also have access to the 1.8m Arab users of Hotmail, Microsoft’s free e-mail service.

(source: Al Ahram and Financial via DigAfrica)

SOUTH AFRICAN AIRWAYS’ FLOPPED SITE CREATES TURBULENCE

South Africa Airways’ aborted plan to set up a travel website, Veer.com, in New York cost it more than R100m and amounted to fraudulent misrepresentation, Public Enterprises Minister Jeff Radebe said yesterday.The planned establishment of this offshore company by SAA while Coleman Andrews was CEO and president has been cited as one of the key reasons for concern within government about the airline’s activities.

The aim of Veer.com was to entice more foreigners to fly on SAA, and to Africa, by making use of the internet and booking their trips through the website.

The board of the airline has since terminated the Veer.com project, which has apparently raised concerns about the business case for the organisation. The total cost of the project prior to the halting of it has been estimated at R106m. This came after the airline asked the US-based management consultancy McKinsey in March last year to draw up plans for the proposed company and its website.

An anonymous letter was sent to President Thabo Mbeki, as well as Radebe, among other ministers, earlier this year, in which a range of concerns about the establishment of Veer.com were cited including concerns about the validity of the business case for setting up the organisation.

Radebe said SAA’s legal counsel stated in an application to the SA Reserve Bank last year that the airline had obtained his approval for the establishment of Veer.com.

He said the submission had also indicated that SAA would, in accordance with the Public Finance Management Act, notify the finance minister and the finance department about the proposed establishment.He said: "I had no knowledge of an entity called Veer.com, nor was I approached to grant such approval as required in terms of the (Public Finance Management Act).

Radebe said that he was first approached by Andrews and the former SAA chairman, Bheki Sibiya, about the issue in December last year, but that no request was made to approve the establishment of the organisation. Radebe said that he had asked Transnet to give him a clear indication of how this situation arose."(I also wish to know about) the actions that are proposed to deal with incurring this fruitless expenditure," he said.

Former Transnet MD Saki Macozoma said yesterday that corporate lawyer Michael Katz dealt with the matter on behalf of SAA. There appeared to be a mistake made in the SA Reserve Bank application, he said, which was picked up by the public enterprises department.

Macozoma said that Katz wrote to the department and apologised for the error, but that "the department refused to let it go". He said the establishment of Veer.com went before the SAA board, and that it had been approved, based on the business case and the recommendations put to the board.

(source: Business Day via DigAfrica)

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