Big-bang changes bomb Telkom stock
http://www.busrep.co.za/index.php
September 6, 2004
By Gugulakhe Masango
Johannesburg - Telkom investors were caught with their pants down when communications minister Ivy Matsepe-Casaburri last week unveiled further steps to liberalise the telecommunications sector.
When the "big-bang" liberalisation was announced by Matsepe-Casaburri, Telkom's shares fell more than 5 percent, wiping about R3 billion off the fixed-line monopoly's capitalisation.
They ended on Friday down 3 percent, or R2.65 a share, closing at R74.85.
The minister announced that from next February value-added network operators could carry voice signals over the internet.
They could use network services of their choice and/or trade their networks while private operators would be allowed to sell or sublet spare capacity on their services.
Steve Minnaar, a telecoms analyst at Old Mutual Asset Managers, said the announcement to accelerate deregulation of the sector took investors by surprise and that "is showing in the declining share price".
As expected, investors went on a buying spree of the shares of listed companies that own internet service providers (ISPs).
The shares of Dimension Data, which owns Internet Solutions, shot up more than 5 percent during the day to close at R3.67 on Friday.
Brett Dawson, Didata's chief executive, said: "The news of further deregulation of the sector is undoubtedly positive for the company and for the country to be competitive."
The share price of Naspers, which owns two ISPs, M-Web and
Tiscali South Africa, climbed R1.95 to close at R50.45 on Friday.
Analysts said this was because of the deregulation of the sector and the company's trading update on Friday that its profits would be more than 30 percent better.
The Internet Solutions network is ready for voice over internet protocol (VoIP). Tiscali has been delivering VoIP in many countries and M-Web will be interested.
Telkom, which is the biggest provider of internet services, was still studying the new policy directives.
"It will take a while to analyse the implications," said Ravin Maharaj, Telkom's spokesperson.
Sentech, the state-owned commercial signal distributor which has the potential of being a third network operator, welcomed the new policy.
"It provides us with great growth opportunities," said Dingane Dube, Sentech's executive of regulatory affairs.
The new policy directives have been initiated to contribute to stimulating economic development by lowering communications costs.
Cheaper telephone call rates could also entice international companies to build call centres in South Africa.
Dobek Pater, a telecoms analyst at consulting house Africa Analysis, said the government was taking the prudent option of facilitating changes rather than trying to stem the inevitable.
He said most of the benefits for now would accrue to the business sector, not necessarily the big corporates only, but also small businesses.
The greatest benefits for residential customers could actually come to the fore in the cellular sector as they became less reliant over time on Telkom to provide backhaul, he said.
There is no guarantee that there will be a second network operator (SNO) to compete with Telkom by the target date of September 17.
"The market will therefore lack an SNO able to provide facilities for many service providers and this will leave Telkom in a continued privileged position as the sole fixed-line network provider with comprehensive national backbone," Pater said.
Brian Neilson, a director of local research group BMI-TechKnowledge, said the announcement would extend the benefits of VoIP to poorer communities in all areas such as informal settlements in major metropolitan areas.
Rural people would benefit as VoIP would in future be provided by operators with underserviced-area licences.
He said more users would be able to afford broadband internet access as prices came down rapidly because of competition in backbone provision.
http://www.busrep.co.za/index.php
September 6, 2004
By Gugulakhe Masango
Johannesburg - Telkom investors were caught with their pants down when communications minister Ivy Matsepe-Casaburri last week unveiled further steps to liberalise the telecommunications sector.
When the "big-bang" liberalisation was announced by Matsepe-Casaburri, Telkom's shares fell more than 5 percent, wiping about R3 billion off the fixed-line monopoly's capitalisation.
They ended on Friday down 3 percent, or R2.65 a share, closing at R74.85.
The minister announced that from next February value-added network operators could carry voice signals over the internet.
They could use network services of their choice and/or trade their networks while private operators would be allowed to sell or sublet spare capacity on their services.
Steve Minnaar, a telecoms analyst at Old Mutual Asset Managers, said the announcement to accelerate deregulation of the sector took investors by surprise and that "is showing in the declining share price".
As expected, investors went on a buying spree of the shares of listed companies that own internet service providers (ISPs).
The shares of Dimension Data, which owns Internet Solutions, shot up more than 5 percent during the day to close at R3.67 on Friday.
Brett Dawson, Didata's chief executive, said: "The news of further deregulation of the sector is undoubtedly positive for the company and for the country to be competitive."
The share price of Naspers, which owns two ISPs, M-Web and
Tiscali South Africa, climbed R1.95 to close at R50.45 on Friday.
Analysts said this was because of the deregulation of the sector and the company's trading update on Friday that its profits would be more than 30 percent better.
The Internet Solutions network is ready for voice over internet protocol (VoIP). Tiscali has been delivering VoIP in many countries and M-Web will be interested.
Telkom, which is the biggest provider of internet services, was still studying the new policy directives.
"It will take a while to analyse the implications," said Ravin Maharaj, Telkom's spokesperson.
Sentech, the state-owned commercial signal distributor which has the potential of being a third network operator, welcomed the new policy.
"It provides us with great growth opportunities," said Dingane Dube, Sentech's executive of regulatory affairs.
The new policy directives have been initiated to contribute to stimulating economic development by lowering communications costs.
Cheaper telephone call rates could also entice international companies to build call centres in South Africa.
Dobek Pater, a telecoms analyst at consulting house Africa Analysis, said the government was taking the prudent option of facilitating changes rather than trying to stem the inevitable.
He said most of the benefits for now would accrue to the business sector, not necessarily the big corporates only, but also small businesses.
The greatest benefits for residential customers could actually come to the fore in the cellular sector as they became less reliant over time on Telkom to provide backhaul, he said.
There is no guarantee that there will be a second network operator (SNO) to compete with Telkom by the target date of September 17.
"The market will therefore lack an SNO able to provide facilities for many service providers and this will leave Telkom in a continued privileged position as the sole fixed-line network provider with comprehensive national backbone," Pater said.
Brian Neilson, a director of local research group BMI-TechKnowledge, said the announcement would extend the benefits of VoIP to poorer communities in all areas such as informal settlements in major metropolitan areas.
Rural people would benefit as VoIP would in future be provided by operators with underserviced-area licences.
He said more users would be able to afford broadband internet access as prices came down rapidly because of competition in backbone provision.
]