Engaged signal
The new phone operator has been delayed so many times, the chances of it having any tangible impact on the South African market are slim. Each delay has allowed Telkom to entrench its dominance further by offering big corporate customers long-term contracts, expanding its network and refining its product and service offerings.
Ironically, the four-year delay in launching the new operator has probably benefited customers far more than its actual launch will, simply because the prospect of competition has forced Telkom to raise its game.
Should the new operator ever get off the ground, studies show it will be lucky to capture 2,5% of market share in its first year. And it needs about 15%-20% to start making money on its upfront investment. Deep pockets and an innovative business strategy will be needed if it is to survive at all.
But government is desperate to bring down SA’s telecommunications costs, which are among the highest in the world. So rather than adding to the operator’s debt burden with the R2bn-odd acquisition of Eskom’s telecoms infrastructure, the new idea is for the state to take ownership of this network and lease it back to the second operator at cost plus 4%.
As it stands, the plan is fraught with problems. Let’s not forget that the state holds a big stake in Telkom, so there is a clear conflict of interest in it being able to influence the price of a big portion of the new operator’s infrastructure. Its intentions are good now, but times change.
The state could argue that the Independent Communications Authority of SA (Icasa) will set and implement the leasing tariffs. But Icasa is deeply troubled at the moment amid allegations that it lacks leadership and is facing institutional collapse. And the communications ministry has tried repeatedly to reduce its independence.
Nevertheless, it is in the interests of this country that a viable, sustainable competitor to Telkom be introduced as soon as possible. There is now limited public confidence that this will ever happen. So if there’s a new initiative by government to achieve it, let’s hear it.
Any move to break Telkom’s de facto monopoly has to be welcomed, as long as rules and regulations are in place to avoid longer-term problems. And that calls for an empowered Icasa.
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