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Friday, 19 October, 2001, 18:42 GMT 19:42 UK
South Africa shuts out phone competition
South Africa's main telecoms companies
Will Cell-C or M-Cell be able to break Telkom's monopoly?
South Africa's dominant phone company, Telkom SA, is to be privatised at last, thanks to a new law finalised by parliament on 18 October.

But competitors are concerned that the law fails to break the company's fixed-line monopoly till 2005, putting next year's planned sale of a licence for a second national operator (SNO) at risk.

The new bill is almost certain to pass unamended on 25 October, given that it is supported by the ruling African National Congress which has 66% of parliament's seats.

Consumer groups and telecoms companies had hoped the 2005 deadline for carrier pre-selection would be moved forward to 2003.

Introduced in Europe as the phone market was liberalised during the 1990s, carrier pre-selection means consumers get to choose which phone company to use for local, national and international calls.

That would make next year's licence sale an attractive proposition. But now, analysts say, the attraction is greatly diminished.

Faults on the line

And some believe the bill is designed simply to make sure the sell-off of 20% of Telkom - 30% is already owned by US operator SBC and Telekom Malaysia - produces the best price, rather than the best deal for users.

As it stands, the government's pre-existing bias in favour of Telkom is continuing, according to Cell-C which won the country's third mobile licence in February

"This monopoly [Telkom] has attempted and, it appears, succeeded in thwarting much-needed plans to introduce competition in the market," M-Cell said.

"There is no merit in considering the introduction of a competitor to Telkom without carrier pre-selection as an option, to cite one example."

And M-Cell, South Africa's number two mobile operator and rated by many as the most likely bidder for the second landline licence, said it was unable to decide whether it would be worthwhile.

"We are concerned about whether the environment proposed would enable the development of a viable SNO," an M-Cell spokesman said.

Best of a bad job?

The chairman of the parliamentary committee which drew up the bill, the ANC's Nkenke Kekana, said the draft had done its best to balance the interests of consumers, business and the government.

But opposition member of parliament Suzanne Vos was despondent.

"We have killed the SNO," she said. "No-one could afford to invest the sort of capital needed to provide the facilities-based competition the government seeks when carrier selection will be withheld until 2005."

See also:

13 May 01 | Europe
Turk Telecom faces privatisation
30 Aug 01 | Business
Strike shakes South Africa
28 Aug 01 | Business
Investors fear South Africa strike
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