TATA NOT KEEN
The denial follows media reports that VSNL, a Tata group company, would take a 26% stake in InfraCo, which houses Eskom’s telecommunications assets. Government, the reports suggested, would retain a 74% shareholding.
Eskom’s telecom assets, which together make up a national backbone communications network, are essential to Neotel as it begins offering services, first to wholesale customers and later to business and residential consumers. Eskom holds 15% of Neotel while Tata and VSNL hold a controlling 26% stake.
A Neotel spokesman says rather than purchase a stake in InfraCo, the company will lease access to the infrastructure.
The company plays down criticism of the decision by public enterprises minister Alec Erwin to hold on to Eskom’s assets rather than sell them to Neotel.
Neotel MD Ajay Pandey says government promised Tata it would have access to Eskom’s network. It did not give an undertaking to sell this network to the company, he says. Pandey adds that there are “no unfavourable terms” in its agreement with InfraCo.
The InfraCo lease agreement follows hot on the heels of Neotel’s decision to buy state-owned transport company Transnet’s high-capacity metropolitan fibre-optic network for R286m.
Erwin is keeping his plans for Eskom’s telecom assets close to his chest. Until last week, the department was reluctant to admit that InfraCo even existed.
Erwin’s spokesman, Gaynor Kast, says cryptically: “We are consulting and will be deciding on the full services network assets [of Eskom] in the near future.”
Kast declines to give reasons why government decided to hold on to the assets and won’t say what plans it has to sell equity in InfraCo to outside parties.
“There are various negotiations under way and until a decision is taken there will be no further comment on who the development partner or partners are. A decision around InfraCo will be made once all the critical details have been finalised,” she says.
The public enterprises department may be tight-lipped about InfraCo but deputy communications minister Roy Padayachie, speaking at an Internet Service Providers’ Association (Ispa) conference earlier this week, said Telkom and Eskom’s telecom assets would be developed into what he describes as a “national broadband spine”.
Pandey says leasing access from InfraCo ties neatly into Neotel’s strategy of outsourcing as many of its business operations as possible. “Neotel will outsource all nonessential functions.”
It will be a lean operation, he says. Neotel employs just 40 people now but plans to increase this to about 250 by the middle of next year when it starts offering retail services. Outsourcing means the group will indirectly employ 10 times this number, Pandey says.
He makes it clear that Neotel will use local service providers where it can. Offshore partners will be sought only if it cannot find SA companies to do the work.
Neotel expects to get off to a relatively slow start. This is understandable, given its reliance on rival Telkom, which is providing it with access to the undersea cable it needs to provide international wholesale services.
Pandey won’t say what sort of discount he has negotiated with Telkom but concedes he hopes Neotel will get a better deal once an agreement governing the undersea cable comes to an end in April 2007. Until then, SA companies are required to lease capacity on the cable from Telkom.
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