South Africa is Sitting On R1 Billion Telecoms Fund

Mergers, Acquisitions and Financial Results

A fund of R1bn that telecoms operators have contributed to the government to take voice and data services to rural areas is still sitting idle when it could be used to reward companies willing to roll out those facilities.

Cash donated to the Universal Service and Access Fund should be used as an incentive to encourage companies to extend broadband coverage to bring all South Africans into the knowledge age. Instead it is being hoarded by the Treasury, the Internetix technology conference heard last week.

"There is R1bn in the Universal Service Fund which is not being used," said Telkom SA MD Pinky Moholi. Using the cash as an incentive would be far more successful than building social responsibility obligations into their licences, Moholi said.

Paris Mashile, chairman of the Independent Communications Authority of SA (Icasa), agreed that "this huge pile of money" could finance companies that were willing to roll out new networks, and the policy makers were at fault for not putting it to work. Tenders to connect rural areas could be awarded to the lowest bidder, which would be funded by that cash, he said.

The fund, run by the Universal Service and Access Agency of SA (Usaasa), has mounted as the operators pay 0.2% of their annual revenue into it. The Treasury has paid out only part of the cash and blames Usaasa for not coming up with viable proposals.

Vodacom 's former CEO, Alan Knott-Craig, disagreed with giving incentives to companies to cover rural areas. "It will end up with everybody trying to get an incentive for something they should be doing because it's just sound business," he said. "Get rid of incentives and obligations, and get the government out of this business."

Almost the only role the government should play was to force down the interconnection fees that made cross-network calls so pricey, and hand out radio spectrum more efficiently, he said.

Business Day