SA’S SNO TELECOM BIDDER PLANNING TO SPEND R9-11 BILLION

Telecoms

The two companies bidding for the majority stake in the second network operator (SNO) were planning to spend between R9 billion and R11 billion on capital expenditure (capex) over the next 10 years, according to documents published Tuesday last week.

CommuniTel Consortium, which includes Telecom Namibia, and Two Consortium are vying for the 51 per cent equity stake in the SNO.Two Consortium estimated its cumulative capital investment would reach R9 billion by 2013. CommuniTel planned a total capex of R11.2 billion in the same period, with nearly 40 per cent required in the first four years.

A winning bidder for the 25-year SNO licence will be recommended to communications minister Ivy Matsepe-Casaburri on August 15 by the telecommunications regulator.

Two Consortium consists of Swedtel; Norwegian Telenor Telecom; Mvelaphanda, led by Tokyo Sexwale; and Blue Planet Telecom.

CommuniTel includes Telecom Namibia; Detecon/T-Systems; Premier Contracts Agency; the Umkhonto weSizwe Veterans’ Association; and Gateway Communications, a British-based firm.

The two applicants intend to enter the market in different ways. In its bid documents, Two Consortium said it had developed a business model based on targeting gaps in Telkom’s products and services .

The consortium said that instead of a Telkom lookalike strategy, which most often led to a direct price war, it would entice those customers that had not been provided with adequate services. It expected its total revenues to increase from R1,2 billion next year to R8,7 billion in 2013.

It projected residential voice customers to grow from 321 000 next year to 3,2 million in 2005, and residential data customers to grow from 25 000 to 250 000 in 10 years.

Two Consortium said its operational launch should take place no longer than six months after the licence had been awarded.

CommuniTel said it had developed a hybrid business model known as "churn and grow," to aggressively attack Telkom, capture the market and generate revenues.

CommuniTel estimated its revenue at R14 billion in 2013, allowing for price erosion, and said about 40 per cent of the sales would be derived from data products.

It believed the SNO could achieve a market share of just under 15 per cent of the fixed-line network revenue by the end of 10 years. "Our total market share in year 10 will be about 14.5 per cent," CommuniTel said. It could launch its network as soon as possible after the licence had been awarded, it said.

The Namibian