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South African Ownership required for Sea Cable so Seacom drops out

Communications Minister Ivy Matsepe-Casaburri announced that no undersea cable will be allowed to land in SA and provide cheaper broadband unless it is majority owned by local or African investors. It is not clear how this condition squares with the Government’s wider commitment to liberalised markets. The move has also prompted Seacom to pull out of building its proposed East African cable and is everything that detractors of the South African Government feared would happen.

The South African move is designed to get EASSy to fall into line with the NEPAD Protocol, of which the South African Government has been the strongest supporter. The industry awaits a final set of guidelines from the Ministry. The South Africans have already led moves behind the scenes to try and get the region’s incumbents to withdraw from the EASSy project.

Telkom, Neotel and MTN together own 27% of the 10000km Eassy cable. But that will only be sufficient to let it dock in SA and give the three operators the bandwidth they are paying for if the minister decides that African investors - rather than purely South African - are sufficient.

As an industry analyst pointed put in Business Day it was impossible for every country where a cable landed to insist on majority local ownership, as numerous countries would be clamouring to control a limited percentage of shares.

"It's not exactly conducive to creating an environment for investment," said another.

There is the familiar confusion in the South African Government’s mind between its national interest and the interests of the rest of the continent. For it is now supporting the doomed NEPAD project to build cables up both the west and east coasts of Africa, something that will only happen with South African Government money. All of this clears the way for the Kenyan Government’s TEAMS project to slip through the middle of this mess and be the first to complete.

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