Cablegate: South Africa Telecommuncations: Second

VZCZCXRO0849
RR RUEHDU RUEHJO RUEHMR
DE RUEHSA #4934 3540943
ZNR UUUUU ZZH
R 200943Z DEC 05
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 0560
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RHDIFCC/FCC WASHDC

UNCLAS PRETORIA 004934

SIPDIS

SENSITIVE

SIPDIS

FCC FOR PATRICK BOATENG

E.O. 12958: N/A
TAGS: ECPS EINV ECON SF
SUBJECT: SOUTH AFRICA TELECOMMUNCATIONS: SECOND
NATIONAL OPERATOR LICENSED GETS NOD

SENSITIVE BUT UNCLASSIFIED; PROTECT ACCORDINGLY. NOT
FOR INTERNET DISTRIBUTION.

1. (SBU) December 9 the Independent Communications
Authority of South Africa (ICASA) licensed the yet-to-
be-named Second National Operator (SNO). The SNO will
compete with monopoly fixed line telephone operator
Telkom in a market plagued by extraordinarily high
prices. Although the SNO has not yet announced its
plans, industry insiders say it will launch operations
in July and will concentrate on the business market.
They do not expect significantly lower telecom prices
until the SNO has been operating for a couple of years.

2. (SBU) Industry insiders say that start up operations
will be difficult. The SNO is comprised of various
shareholder organizations which struggle to unify into
an effective competitor. SNO shareholders include
black economic empowerment partner Nexus Connexion,
which owns 19 percent; Transtel and Eskom
Telecommunications, which own 30 percent between them;
and Sepco which owns 51 percent. The SNO will need to
either access the existing fixed line network of
Telkom, as required by law, or build its own network.
ICASA is putting pressure on Telkom to offer access to
its network to the SNO and other operators at a lower
price.

3. (SBU) COMMENT. Licensing of the SNO is nearly three
years late, delayed by a lack of serious, qualified
investors and SAG bureaucratic ineptitude. With
Telkom's high prices widely acknowledged to be a
serious impediment to stronger economic growth,
pressure will be on the SNO to bring lower
telecommunications charges soon. END COMMENT.

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