For the most part, Communications Minister Ivy MatsepeCasaburri’s announcement last week will come as no surprise. In rejecting the first round of bids as substandard last year, the Independent Communications Authority of SA (Icasa) suggested that government should go ahead and license a new operator.

This would allow the existing shareholders, state-owned Eskom Enterprises and Transtel, with a joint 30%, and empowerment group Nexus, with 19%, to get it up and running. It should then warehouse the 51% stake until the global telecommunications improved and international operators were in a better position to bid for the equity.

Matsepe-Casaburri has largely gone along with this recommendation, but with a twist. She will issue a licence for the new player to begin operations, and will warehouse the remaining equity in the interim.

The twist is that government will identify shareholders to buy the warehoused stake in eight weeks. The question is how it will achieve this feat, which it has failed to do despite two tender processes over the past two years.

The general industry consensus seems to be that while it may be a flawed initiative, at least the move will introduce competition to Telkom’s fixed-line business for the first time. One government official labelled the plan as "unworkable", but Matsepe-Casaburri is adamant it can be done. "People have been talking, indicating interest. There are a combination of local and foreign players. We can do it," she says.

The minister says the new process of finding an investor will be led by government, which raises concerns about transparency.Communications Director-General Andile Ngcaba says Icasa will be involved in the selection process, but Icasa chairman Mandla Langa declined to be drawn on this last week.

Business Daily