I guess I'll have to go and buy a copy [
]
OK. So I have paid for my copy and I'm typing it in. Please excuse the typos. And go and buy a copy as well, dammit [
] If you really want to cheer up, take a look at the "Car Wars" article in the current Noseweek. It's well worth the money. And there is a good article about Telkom too.
>>>>
Finance Week Page 47: Inflation Targets
<font size="4">Telkom's prices called to account</font id="size4">
<i>Indications are that Telkom's ability to charge excessive tariffs will be curbed</i>
Good news on the inflation front is
that Government at last appears to
be determined to tackle price increases
that are controlled by the public sector.
The idea is to bring down inflation and
reduce the cost of doing business in SA.
Prices that are determined by the
public sector - and not by the forces of
supply and demand in a free market -
are known as administered prices.
These price increases have exceeded
the 6% upper limit of SA's inflation target.
There's some debate what should be
included in SA's Administered price
Index (API). For example, Government
sets the petrol price, but it's based on a
market-determined international price,
and Government therefore has little
"control" over it.
The debate will be settled this
month when Statistics SA begins
publishing an API inflation rate. In the
meantime, there's a basket of administered
prices released by the SA Reserve
Bank: public transport, petrol and
diesel, communications, electricity,
paraffin, licenses, water, education and
medical costs.
One of the highest profile prices on
this list is communications services.
Telephone prices in SA are exhorbitant
compared to other countries. However,
indications are that Telkom's abaility to
charge excessive tariffs will be curbed
in future.
Telkom's prices are currently
regulated by the Independent Communications
Authority of SA (ICASA), which is
now reviewing the way Telkom's tariff
increases are capped. It's expected that
the outcome will deal a blow to Telkom
- much to the delight of consumers.
Telkom's prices are currently set
according to the consumer price index
(CPI), less a productivity factor that's
currently set at 1.5%. Individual prices
may exceed that formula, but the basket
as a whole has to comply. The
weightings of the tariffs in the basket
are based on Telkom's revenues. But
that methodology is likely to change.
The last price cap review took place
in 2001 and the new one will differ from
the previous one. For the first time,
Telkom will provide ICASA with details
of its accounts and costs.
Telkom has been asked to submit its
"Chart of accounts/cost allocation manuals"
(Cocam) to ICASA by end-September.
The Costing information will enable
ICASA to model the Telkom business and
understand how costs and revenues
are assigned to the various services
segments. An ICASA source said an
announcement on the price cap review
is due later this month.
Another development, which bodes
well for future communications costs, is
the sweeping liberalisation announced
by Communications Minister Ivy
Matsepe-Casaburri. The reforms will see
Value-Added Network Services (VANS)
compete directly with Telkom.
These moves to cur telecommunications
costs are in line with President
Thabo Mbeki's microeconomic reform
strategy, which at last appears to be
coming to fruition. The strategy was
first flagged in Mbeki's state of the
nation address in February 2001. Its
goals include a reduction in the cost of
doing business in SA.
Another crucially important input
cost is electricity. SA has low electricity
tariffs because it has more generating
capacity than it needed for the past
14 years. However this period of over-
capacity is drawing to a close with
Eskom's surplus capacity expected to
run out by 2007. The need to invest in
new capacity is putting upward pressure
on electricity costs.
Steve Lennon, MD of Eskom's
resources and strategy division, says
that electricity costs will double over
the next 20 years. That translates to a
rate of increase of 5.7%/year.
<<<<
The rest of the article deals with Eskom.
