[kictanet] SA Govt to strong-arm Telkom

[A. Wanjira Munyua]

more intriques Re; EASSy.

------- Original Message from Wakabi, Fibre for Africa List......

Telkom SA, champion of an EASSy run on the terms of telecos  who will
invest in it, but owned by a government that is dead-set to see the
regional fibre undertaking built under the aegis of NEPAD, on stringent
Open Access standards. Talk of a being caught between a rock and hard
place.

Wakabi

Govt to strong-arm Telkom

BY PAUL VECCHIATTO , ITWEB JOURNALIST

ITWeb, 28 March 2007 - Government will use its board voting power to make
Telkom toe the line in participating in the East African Submarine Cable
System (Eassy), says Lyndall Shope-Mafole.

The Department of Communications director-general made this statement
after delivering her department's 2007-2010 strategy to the Parliamentary
Portfolio Committee on Communications yesterday afternoon.

She also attacked the Eassy supplier contract signed on 9 March between
Telkom, the network operators and equipment supplier Alcatel Lucent. She
said it was outside the policy framework.

Government would use its six seats on the Telkom 10-member board to ensure
the telecommunications utility follows policy, Shope-Mafole noted.

This is the most overt statement, by a senior government official, that
the state will use the power its 38% stake gives it in Telkom. The entity
listed on the Johannesburg and New York stock exchanges in 2002. The
Public Investment Corporation, another state-owned entity, owns a further
7.1% of Telkom's shares.

At odds
The Eassy project has been marked by conflicting points of view between
government and companies. The former wants open and non-discriminatory
access, meaning one charge irrespective of whether the user is an
investor. Companies, on the other hand, want it to be run along commercial
lines.

Telkom CEO Papi Molotsane previously said his company's participation in
Eassy would be along commercial lines – a stand that has placed
Telkom at
odds with government's policy.

On 9 March, Telkom, along with the cellular network operators, signed an
Eassy supply contract with international equipment vendor Alcatel Lucent.
This was a final legal step before the construction of the $300 million
submarine cable.

However, the South African government, under the auspices of the African
Union, is still trying to get more of the original 23 countries that
agreed to the Eassy project to sign the protocol. Only 12 countries have
signed so far, and only one, Rwanda, has had the protocol ratified by its
Parliament.

The Eassy supplier contract is outside the project's policy framework,
says communications department DG Lyndall Shope-Mafole.Responding to
concerns that there seemed to be two Eassy processes, Shope-Mafole said
the supply contract was not within the policy framework as developed for
the project.

“I have indicated this to Telkom and have had discussions with their
CEO,
but have not discussed it with the other companies that signed it. That is
why Sentech did not sign, because Sentech understands it can't sign
outside a policy framework, and I suppose the others will learn.

“Eassy is not two processes. What we at the Department of Communications
have to make businesses understand is that ICT is not just a business, it
is far more important than that. Our policy is that it must be an open,
non-discriminatory access model.”

Shope-Mafole said all the governments that had signed the Eassy protocol
were determined the cable would not be dominated by one consortium, as had
happened with the SAT-3 west coast submarine cable.

Limit investment
Shope-Mafole said the framework was based on that of non-discriminatory
access, whereby investors would benefit from the number of users and not
through owning the infrastructure.

At the next Eassy Intergovernmental Assembly in Zimbabwe, on 30 March,
government would propose investor participation in the Eassy project would
be limited to $2 million (R14.5 million), so that large companies do not
dominate the cable, she noted.

Shope-Mafole pointed out there was no adversarial relationship between
government and Telkom, as the telecoms utility had been involved in the
Eassy project since the beginning. “But they are just like any other
company and will try their luck.”

Telkom declined to comment. In mid-morning trade, Telkom's share price was
down 100c, at R163.

Eassy is also known as the Nepad Broadband Infrastructure Network, because
it comprises the submarine cable and a terrestrial component running
through land-locked African countries.




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