Don't Expect Miracles

[love56k]

http://www.tmcnet.com/usubmit/2006/04/21/1595823.htm

MOD NOTE ADDED 11h33 (22 April 2006): PLEASE REFER TO POST 19 IN THIS THREAD FOR A CORRECT/UNEDITED COPY OF THIS ARTICLE.

[April 21, 2006]
(Financial Mail Via Thomson Dialog NewsEdge)

Second network operator

DON'T EXPECT MIRACLES

SNO Telecom cautions prospective customers that it will not be able to tackle Telkom head-on Long-suffering consumers, tired of high telecommunications prices and lousy service, have been pinning their hopes on the recently licensed second network operator to bring down prices and give Telkom a run for its money in fixed-line telephony. They're set to be deeply disappointed.

SNO Telecom, as the second network operator is known for now, says it will not intentionally start a price war with Telkom. Nor will it be able to compete head-on with the incumbent.

That's the warning from the company's new MD, Ajay Pandey, who says SNO Telecom wants to raise about R7bn to build its network over the next five years. That's less than 25% of the R30bn investment Telkom will make in its network over the same period.

Expectations are very high but ... we are not here to trigger a price war, Pandey says.

Rather, SNO Telecom will focus on customer relationships and on providing solutions that will differentiate it from its rivals. That's where the customers will hopefully see some tangible value. Pandey is reluctant to give away too much of the company's strategy. He says it's too early to comment in detail. He does say, however, that the issues that bedevilled the company in its early days when shareholders and prospective shareholders were at each other's throats have been resolved. Of particular interest to Pandey and his management team is the telecom infrastructure owned by shareholders Transnet and Eskom Enterprises, which together own 30% of SNO Telecom. Pandey says this infrastructure will form the basis of the company's network backbone. The intention is to transfer these assets to the SNO, Pandey says. They would hopefully give us a good presence right from the start. These assets will help only up to a point, though. The company will have to raise billions of rand to expand this core network and to build a national access network. It plans to raise the R7bn it estimates it needs through a combination of debt and equity. Pandey says he expects that both local and international banks will be interested in providing the necessary finance.

SNO Telecom should begin offering its first services to the wholesale market Internet service providers and the like by midyear. Thereafter, it will begin selling to corporate customers. Residential consumers will follow only next year, provided the company can get access to the radio frequency spectrum it needs to build a wireless access network.

There could be a hiccup, though. State-owned broadcast signal distributor Sentech is opposing a proposal by the regulator, the Independent Communications Authority of SA (Icasa), that the 800MHz frequency band, which is currently used for television broadcasting, be reclassified for use by telecom operators (see Technology & Communications April 14).

Fixed lines are another option. Planned policy changes may mean SNO Telecom will be able to make use of Telkom's last-mile infrastructure the local loop of copper cables that connects consumers to its network. But Pandey warns that, though unbundling the local loop is a good thing, it requires detailed regulations and it could take some time to craft these. He emphasises that access to the right frequency spectrum is essential, particularly if the company is to provide telecom services to the rural poor.

Pandey says SNO Telecom has seen tremendous excitement from individuals, corporate buyers and Internet service providers. The market, he says, wants choice. Anybody and everybody wants to know how soon we can be up and running. But he does not believe that the company will be able to capitalise on anti-Telkom sentiment to win business. We'll gain [customers] if we offer something good. We cannot match the size of Telkom's network. We are just coming [into the market], he says. Will we take Telkom head-on? I think the answer to that question is no. SNO Telecom currently has fewer than 20 employees at its head office in Woodmead, north of Johannesburg, and several vacancies in management remain, including the position of chief financial officer. Angus Hay has been seconded from Transnet subsidiary Transtel, where he is chief technology officer, to head strategy. Indian nationals Pravir Dahiya and Harjit Singh are head of networks and principal executive officer respectively.

India's VSNL, which has a controlling 26% stake in SNO Telecom, has the right to appoint the company's MD and chief financial officer.

 

[curiouswanderer]

Telkom has gone so far in providing poor service at a high cost such that there is no incentive for the SNO to go into a price war with them. This really shows many what country we live in. Nothing is cheap and corporates do not have 'low price' in their dictionaries.

 

[kaspaas]

SNO Telecom currently has fewer than 20 employees at its head office in Woodmead,

I see trouble brewing...

 

[curiouswanderer]

the are taking their license for granted it seems. 20 employees can prob run a phone service for 2 suburbs or so let alone all the major cities in the countries...

 

[Sneeky]

DON'T EXPECT MIRACLES,,,, say the SNO

Second network operator DON'T EXPECT MIRACLES SNO Telecom cautions prospective customers that it will not be able to tackle Telkom head-on Long-suffering consumers, tired of high telecommunications prices and lousy service, have been pinning their hopes on the recently licensed second network operator to bring down prices and give Telkom a run for its money in fixed-line telephony. They're set to be deeply disappointed.
SNO Telecom, as the second network operator is known for now, says it will not intentionally start a price war with Telkom. Nor will it be able to compete head-on with the incumbent.

That's the warning from the company's new MD, Ajay Pandey, who says SNO Telecom wants to raise about R7bn to build its network over the next five years. That's less than 25% of the R30bn investment Telkom will make in its network over the same period.

Expectations are very high but ... we are not here to trigger a price war, Pandey says.

Rather, SNO Telecom will focus on customer relationships and on providing solutions that will differentiate it from its rivals. That's where the customers will hopefully see some tangible value. Pandey is reluctant to give away too much of the company's strategy. He says it's too early to comment in detail. He does say, however, that the issues that bedevilled the company in its early days when shareholders and prospective shareholders were at each other's throats have been resolved. Of particular interest to Pandey and his management team is the telecom infrastructure owned by shareholders Transnet and Eskom Enterprises, which together own 30% of SNO Telecom. Pandey says this infrastructure will form the basis of the company's network backbone. The intention is to transfer these assets to the SNO, Pandey says. They would hopefully give us a good presence right from the start. These assets will help only up to a point, though. The company will have to raise billions of rand to expand this core network and to build a national access network. It plans to raise the R7bn it estimates it needs through a combination of debt and equity. Pandey says he expects that both local and international banks will be interested in providing the necessary finance.

SNO Telecom should begin offering its first services to the wholesale market Internet service providers and the like by midyear. Thereafter, it will begin selling to corporate customers. Residential consumers will follow only next year, provided the company can get access to the radio frequency spectrum it needs to build a wireless access network.

There could be a hiccup, though. State-owned broadcast signal distributor Sentech is opposing a proposal by the regulator, the Independent Communications Authority of SA (Icasa), that the 800MHz frequency band, which is currently used for television broadcasting, be reclassified for use by telecom operators (see Technology & Communications April 14).

Fixed lines are another option. Planned policy changes may mean SNO Telecom will be able to make use of Telkom's last-mile infrastructure the local loop of copper cables that connects consumers to its network. But Pandey warns that, though unbundling the local loop is a good thing, it requires detailed regulations and it could take some time to craft these. He emphasises that access to the right frequency spectrum is essential, particularly if the company is to provide telecom services to the rural poor.

Pandey says SNO Telecom has seen tremendous excitement from individuals, corporate buyers and Internet service providers. The market, he says, wants choice. Anybody and everybody wants to know how soon we can be up and running. But he does not believe that the company will be able to capitalise on anti-Telkom sentiment to win business. We'll gain [customers] if we offer something good. We cannot match the size of Telkom's network. We are just coming [into the market], he says. Will we take Telkom head-on? I think the answer to that question is no. SNO Telecom currently has fewer than 20 employees at its head office in Woodmead, north of Johannesburg, and several vacancies in management remain, including the position of chief financial officer. Angus Hay has been seconded from Transnet subsidiary Transtel, where he is chief technology officer, to head strategy. Indian nationals Pravir Dahiya and Harjit Singh are head of networks and principal executive officer respectively.

India's VSNL, which has a controlling 26% stake in SNO Telecom, has the right to appoint the company's MD and chief financial officer.

http://www.tmcnet.com/usubmit/2006/04/21/1595823.htm

Yay,,, not

The general idea of having more than 1 operator was to bring down the price. These yoyo's haven't even started yet and they are already booking their seats (first class passage) on the gravy train next to Telkom with all sorts of excuses now about how they will compete on service, not price.
How long do you think it will take Ivy to get a 3rd and 4th operator, cause these okes it seems are just going to be plain useless and not accomplish what the ultimate goal was for their mere existence,,,, significantly reducing the cost of telecoms in this frikkin country.

 

[ettubrute]

Ag ja... just more of the same... bloody shafters!

 

[pupa]

What did You guys expect? They have carteblanche guarantees that they will ride the gravy train 24 moths unhindered! before any changes will occur that will reduce their profitability thus before new competition rules will be introduced. That is if it will not again be further delayed by meetings and determinations. You are looking at minimum 4-5 years before we will see real competition! TELKOM have everybody by the balls. That's for sure!

 

[antowan]

ROFL. No suprise there. We are just rehashing the Australian mistakes. Why is it that Africa always has to flipping suffer when the answers are as clear as daylight. Others have made the mistakes LOOOONG before us. All we have to do is look!

 

[bwana]

ROFL. No suprise there. We are just rehashing the Australian mistakes. Why is it that Africa always has to flipping suffer when the answers are as clear as daylight. Others have made the mistakes LOOOONG before us. All we have to do is look!

Because politicians look after themselves first and their country second.

Funny - over a year ago the president said he wanted lower telecommunications prices and yet everyone he appointed ignores that. Make treason a hanging offense and find a really thick rope for Ivy.

I see the SNO and Telkom being dragged in front of the competition commission before too long. ICASA just doesnt have the cajones to do anything properly.

 

[AntiThesis]

Why for the love of all that is good and holy? "We want to raise R7bn over the next five years."

If they came out guns blazing, touting their kick-assedness over Telkom and with lower (even slightly) prices, they'd make that 7bn in a year, maybe two. Customers would abandon the stinky Telkom ship wholesale which would in turn force Telkom to rethink their **** the customer strategy.

A price war would be the best thing to happen in this country. The stupidness of people makes me sad. How is it that nobody seems to realise that if you give all the people exactly what they want, you'll make MORE MONEY?

 

[ettubrute]

Seems nobody there passed Ecomomics101!

 

[ettubrute]

full LLU with access given to VANS|ISPs, and nationalise the bloomin Melkbosstrand SAT-3 landing station to allow equal access to SAT-3 bandwidth by both SNOT & Verizon Business [since their parent companies actually are shareholders in SAT-3].

More needed: Telkom needs to be chopped up into smaller bits! Government must relinquish shares in both Telkom and SNOt!

Why the Indians? Most importantly, WHERE ARE THE SOUTH AFRICANS??????

Sitting on the couch, watching either cricket or rugby... or driving around in their fancy 4x4's, the one trying to look smarter and better than the next!

Edit: And after quoting antowan, he goes and deletes his post!

 

[bwana]

Seriously - why would they start a price war when they dont have to?? If you could charge 1000% more than you would (be allowed to) overseas wouldnt you?

Foreign companies come here for the money - not the wonderful climate and the sunny disposition of the populationrolleyes: ) and the government encourages that because they get given loads of shiny stuff - and we know how much they (the government ) likes their shiny stuff.

Unless the market is opened up and regulated prices will never decrease because there will never be competition. Look at the banks, look at the cellphone co's, look at the automotive industry and their so called competition.

 

[antowan]

I don't understand:

• Why the market is still so closed?
  
• Why the SNO is mostly a foreign owned company?
  
• Why just the Indian investment? Where are the local companies who want to compete? Surely there must be enough willing players for a TNO and FNO?
  
• Where is the regulator in all of this? We know our regulator is a bit of a piss willy organization, but this is getting out of hand. If the regulator was worth its salt the SNO wouldn't even have dared to make shifty statements about pricing like these...
  
• What is going on in the DoC? Isn't it perhaps time for a presedential inquest as to who owns part of what and where? Something is amis and it is reflected in the ultra slow pace of change...

 

[ettubrute]

Seriously - why would they start a price war when they dont have to?? If you could charge 1000% more than you would (be allowed to) overseas wouldnt you?

Well, why not charge only 500% more, and attract 5 times the number of customers? Increases the bottom line substantially!

Foreign companies come here for the money - not the wonderful climate and the sunny disposition of the population rolleyes: ) and the government encourages that because they get given loads of shiny stuff - and we know how much they (the government ) likes their shiny stuff.

And there you've stated the biggest problem: gubberment!

 

[antowan]

the are taking their license for granted it seems. 20 employees can prob run a phone service for 2 suburbs or so let alone all the major cities in the countries...

They could outsource. Frankly it would make sense as coupling payment to the number of installations might well be a very good driver for quick market penetration.

I mentioned it months ago that the SNO and Telkom will fix pricing. I still believe that.

 

[mcleodd]

http://www.tmcnet.com/usubmit/2006/04/21/1595823.htm

[April 21, 2006]
(Financial Mail Via Thomson Dialog NewsEdge)

I'd like to know who these people are and why they are republishing the FM's copyrighted content.

Their version of the article is also missing all quotation marks. I'll republish it correctly below.

 

[mcleodd]

Second network operator

DON'T EXPECT MIRACLES
By Duncan McLeod

SNO Telecom cautions prospective customers that it will not be able to tackle Telkom head-on


Long-suffering consumers, tired of high telecommunications prices and lousy service, have been pinning their hopes on the recently licensed second network operator to bring down prices and give Telkom a run for its money in fixed-line telephony. They're set to be deeply disappointed.

SNO Telecom, as the second network operator is known for now, says it will not intentionally start a price war with Telkom. Nor will it be able to compete head-on with the incumbent.

That's the warning from the company's new MD, Ajay Pandey, who says SNO Telecom wants to raise about R7bn to build its network over the next five years. That's less than 25% of the R30bn investment Telkom will make in its network over the same period.

"Expectations are very high but . . . we are not here to trigger a price war," Pandey says.

Rather, SNO Telecom will focus on customer relationships and on providing solutions that will differentiate it from its rivals. "That's where the customers will hopefully see some tangible value."

Pandey is reluctant to give away too much of the company's strategy. He says it's too early to comment in detail. He does say, however, that the issues that bedevilled the company in its early days - when shareholders and prospective shareholders were at each other's throats - have been resolved.

Of particular interest to Pandey and his management team is the telecom infrastructure owned by shareholders Transnet and Eskom Enterprises, which together own 30% of SNO Telecom. Pandey says this infrastructure will form the basis of the company's network backbone. "The intention is to transfer these assets to the SNO," Pandey says. "They would hopefully give us a good presence right from the start."

These assets will help only up to a point, though. The company will have to raise billions of rand to expand this core network and to build a national access network. It plans to raise the R7bn it estimates it needs through a combination of debt and equity. Pandey says he expects that both local and international banks will be interested in providing the necessary finance.

SNO Telecom should begin offering its first services to the wholesale market - Internet service providers and the like - by midyear. Thereafter, it will begin selling to corporate customers. Residential consumers will follow only next year, provided the company can get access to the radio frequency spectrum it needs to build a wireless access network.

There could be a hiccup, though. State-owned broadcast signal distributor Sentech is opposing a proposal by the regulator, the Independent Communications Authority of SA (Icasa), that the 800 MHz frequency band, which is currently used for television broadcasting, be reclassified for use by telecom operators (see Technology & Communications April 14).

Fixed lines are another option. Planned policy changes may mean SNO Telecom will be able to make use of Telkom's last-mile infrastructure - the local loop of copper cables that connects consumers to its network.

But Pandey warns that, though unbundling the local loop is a "good thing", it requires detailed regulations and it could take some time to craft these. He emphasises that access to the right frequency spectrum is essential, particularly if the company is to provide telecom services to the rural poor.

Pandey says SNO Telecom has seen "tremendous excitement" from individuals, corporate buyers and Internet service providers. The market, he says, wants choice. "Anybody and everybody wants to know how soon we can be up and running."

But he does not believe that the company will be able to capitalise on anti-Telkom sentiment to win business. "We'll gain [customers] if we offer something good. We cannot match the size of Telkom's network. We are just coming [into the market]," he says. "Will we take Telkom head-on? I think the answer to that question is no."

SNO Telecom currently has fewer than 20 employees at its head office in Woodmead, north of Johannesburg, and several vacancies in management remain, including the position of chief financial officer. Angus Hay has been seconded from Transnet subsidiary Transtel, where he is chief technology officer, to head strategy. Indian nationals Pravir Dahiya and Harjit Singh are head of networks and principal executive officer respectively.

India's VSNL, which has a controlling 26% stake in SNO Telecom, has the right to appoint the company's MD and chief financial officer.

 

[Drone 42]

I mentioned it months ago that the SNO and Telkom will fix pricing. I still believe that.

Hehe, I also said it's going to be the same as our cellular industry and got a few snotty comment about my statement on this forum. Now hopefully people will start to wake up and see that the SNO wont deliver what everybody is hoping for. They are here to make money!! We live in South Africa remember, the country were the consumer always gets a raw deal.

 

[antowan]

Hehe, I also said it's going to be the same as our cellular industry and got a few snotty comment about my statement on this forum. Now hopefully people will start to wake up and see that the SNO wont deliver what everybody is hoping for. They are here to make money!! We live in South Africa remember, the country were the consumer always gets a raw deal.

I don't have a problem with companies making money. I have a problem with companies making money for NOTHING! WITH Government protection on top of it all.

Good business is a give and take deal. With Telkom atm it is take and take. Telkom takes more than it gives, which leaves us the consumers raw at the end of the day. Competition is a very natural way of avoiding this situation that needs the minimum of corrective regulation. Give consumers choice! Atm something corrupt is preventing this from happening. Somewhere in the corridors of government somebody is protecting the status quo for money. Of this I have very little doubt. I cannot prove it though, but I am beyond the point where I give a **** what government thinks. This whole situation smacks of corruption!