LICENSING OF SA'S SNO THREATENED WITH LEGAL ACTION

Mergers, Acquisitions and Financial Results

The minister of communications has pressed ahead with the awarding of the second national operator (SNO) licence today, despite the dark clouds of pending legal action against her.

A statement issued by minister Ivy Matsepe-Cassaburri's office today says she has granted to the SNO comprising Nexus Connexion, Transtel, Esitel, WIP Investments Nine trading as CommuniTel, Two Consortium and the remaining unallocated equity shareholder, a licence to provide public switched telecommunications services, subject to the following conditions:

* Acceptance of the shareholding and control structure of the SNO.
* Finalisation of and agreement on the business plan.
* Finalisation of the shareholders and subscription agreements.

As stated in the 26 August announcement, a new company will be incorporated which will hold 51% of the equity share capital of the SNO.

In terms of the procedure, the minister awards the licence, then the regulator (ICASA – the Independent Communications Authority of SA) finalises the terms and conditions, and then finally issues the licence with the conditions attached.

Socikwa says the three elements of the process going forward are the selection of the SNO partners, the integration of the various companies to create one entity, and then the final issuing of the licence by ICASA.

“What we have come to expect from ICASA is that they issue a timeline stating when they will hold public hearings and when written submissions have to be made so as to keep the process as transparent as possible,” he says.

Transtel CEO Karl Socikwa says the process going forward will see the selection of the SNO partners, the integration of the various companies to create one entity, and then the final issuing of the licence by ICASA. One of the original bidders, Optis Telecommunications, has instituted legal action against the minister to stop the awarding of the licence until the judicial review is completed. However, the Pretoria High Court yesterday upheld the minister's point of view that the licence announcement must happen.

However, Optis' attorney Bradley Allison says: “My client will continue with his action, especially in the light of Nexus restarting theirs.”

CommuniTel's Mike van den Bergh says the organisation welcomes this as an important and positive step forward, but it had hoped to achieve greater clarity on the investor who will get the unallocated equity.

“The wording of [the Minister's] announcement shows that she's actually playing fast and loose and essentially, being a typical politician.” - CommuniTel's Mike van den Bergh. “The lack of clarity on this issue is currently impeding our progress towards formulating a business plan and shareholders agreement,” he says.

“A key factor here is also that the minister has awarded the licence, but the regulator still has to issue it, so effectively all she has done is made it ICASA's problem.