9 December 2005

South Africa's second national operator has been licensed to operate a publicly switched telephone network, opening up a new era of competition in the country's telecommunications industry.

Following a three-year bidding process, officials from the Independent Communications Authority of SA (Icasa) handed over the public switched telecommunications service licence in Johannesburg on Friday.

The new operator is a coalition between black empowerment group Nexus Connexion (19%), parastatals Transtel and Eskom (30%), Indian group Tata (26%), CommuniTel (12.5%) and Two Consortium (12.5%).

The licensing allows the operator to offer fixed-line and other telecoms services. Although Telkom's fixed-line monopoly officially ended in 2002, the granting of the licence will finally bring to some competition to the sector.

'Local loop' still Telkom's preserve
The new operator expects to begin operations in the second half of 2006, but faces a difficult battle against Telkom's entrenched position.

The "local loop", the copper wire that links households to the exchange, will remain Telkom's preserve. Icasa councillor Tracy Cohen said that the unbundling of the local loop had been delayed until further notice.

The new operator will, initially at least, have to focus on corporate telecommunications and value-added services. Analysts expect initial uptake to be slow, as corporates weigh their options and wait to see how the new entrant fares.

Many South African corporates have already invested in alternatives to Telkom's publicly switched telephone network, such as VOIP and intra-company networks.

Pending legal action between Optis, an earlier bidder for the licence, and the ministry of communications may also delay the rollout of South Africa's second network.

Former communications minister Jay Naidoo told ITWeb he was disappointed at the three-year delay in granting the licence. "It does represent an opportunity lost to the country as a whole because the market was very different when the [second national operator] was first envisaged.

"However," Naidoo added, "I believe it will bring good competition and choice to the country."

Telkom congratulated its new arrival, saying in a statement. "We believe increased competition is beneficial to the economy of South Africa."

	South Africa's second fixed-line operator is set to launch in the second half of 2006 (Image: Transtel)

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