Local ownership for sea cable — minister

Lesley Stones

Lesley Stones is an award winning journalist, and worked for Business Day as an ICT journalist until 2009. Lesley is currently a travel journalist,...

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Communications Minister Ivy Matsepe-Casaburri has confirmed that no undersea cables will be allowed to land in SA and provide cheaper broadband unless they are majority owned by local investors.

The insistence that South African or African investors own a controlling share may mean two planned cables will not be allowed to land without changes to their ownership.

The Seacom cable due to link South Africa to Europe has yet to name its investors, but an agreement for the new fixed-line operator, Neotel, to operate Seacom’s landing station will not be sufficient to impress the government.

Whether the rival $235m Eassy cable planned for Africa’s east coast will win permission to dock will depend on the final guidelines that Matsepe-Casaburri is compiling. Telkom, Neotel and MTN together own 27% of the 10000km Eassy cable. But that will only be sufficient to let it dock in SA and give the three operators the bandwidth they are paying for if the minister decides that African investors — rather than purely South African — are sufficient.

The minister clarified her stance on cable landing rights at the Southern Africa Telecommunication Networks and Applications Conference in Mauritius yesterday.

“We have read about many so called investors announcing that they will be landing their cables in SA,” the minister said. But the communications department was yet to issue guidelines for those landing rights.

Cables would be allowed to land only if they were majority African or South African owned and if they prioritised African development.

One industry analyst said it was impossible for every country where a cable landed to insist on majority local ownership, as numerous countries would be clamouring to control a limited percentage of shares.

“It’s not exactly conducive to creating an environment for investment,” said another.

Matsepe-Casaburri said she was not worried that the regulations would deter investors, which could simply opt to bypass SA.

Nor is she worried that local telecoms players will be unable to raise enough money to take control of these multimillion dollar projects.

In a reference to MTN’s Middle East expansion, she said: “Some of our companies have been paying half a billion dollars to do business elsewhere so I am not sure where the constraints for South African companies could be.”

The minister is also unconcerned that foreign consortiums funding the cables may not want to sell a majority stake to South Africans.

The communications department believes SA’s bandwidth needs will be met by the proposed Nepad undersea cables, which will run east and west from SA to Europe and Asia. Those high capacity cables would support the government’s developmental goals, the minister said.

The government had to make that investment itself “because business is now queasy about having to invest so much in infrastructure when they don’t know what’s going to happen on the continent,” Matsepe-Casaburri said.

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