SOUTH AFRICA TELECOMMUNCATIONS: SECOND

UNCLAS PRETORIA 004934 SIPDIS SENSITIVE SIPDIS FCC FOR PATRICK BOATENG E.O. 12958: N/A TAGS: ECPS EINV ECON SF SUBJECT: SOUTH AFRICA TELECOMMUNCATIONS: SECOND NATIONAL OPERATOR LICENSED GETS NOD SENSITIVE BUT UNCLASSIFIED; PROTECT ACCORDINGLY. NOT FOR INTERNET DISTRIBUTION. ¶1. (SBU) December 9 the Independent Communications Authority of South Africa (ICASA) licensed the yet-to- be-named Second National Operator (SNO). The SNO will compete with monopoly fixed line telephone operator Telkom in a market plagued by extraordinarily high prices. Although the SNO has not yet announced its plans, industry insiders say it will launch operations in July and will concentrate on the business market. They do not expect significantly lower telecom prices until the SNO has been operating for a couple of years. ¶2. (SBU) Industry insiders say that start up operations will be difficult. The SNO is comprised of various shareholder organizations which struggle to unify into an effective competitor. SNO shareholders include black economic empowerment partner Nexus Connexion, which owns 19 percent; Transtel and Eskom Telecommunications, which own 30 percent between them; and Sepco which owns 51 percent. The SNO will need to either access the existing fixed line network of Telkom, as required by law, or build its own network. ICASA is putting pressure on Telkom to offer access to its network to the SNO and other operators at a lower price. ¶3. (SBU) COMMENT. Licensing of the SNO is nearly three years late, delayed by a lack of serious, qualified investors and SAG bureaucratic ineptitude. With Telkom's high prices widely acknowledged to be a serious impediment to stronger economic growth, pressure will be on the SNO to bring lower telecommunications charges soon. END COMMENT. TEITELBAUM