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5 November 2003
So Dr Ivy has finally licensed the second national operator (SNO), although of course there are provisions and issues that still need to be clarified. Well, it would hardly be true to the spirit of the Department of Communications for it to be otherwise, would it?
Yesterday, the minister announced that the 51% share will be warehoused until a suitable investor is found, although a licence will be issued to an entity that consists of the integrated 30% of the state-owned enterprises (SOEs), the 19% held by Nexus Connexion and the warehoused 51% stake.
Of course, the light at the end of the tunnel was the announcement that the department hopes to have found suitable investors for the 51% stake within the next eight weeks. Yes, you read correctly: eight weeks!
The minister's reasoning behind this is that the government wants to move quickly, because “the window of opportunity for the SNO to be feasible is closing”.
Those of us in the know might be tempted to say that the particular window she is talking about actually closed sometime around May last year, when Telkom officially stopped being a monopoly and its rival was supposed to be ready to challenge it.
Of course, the fact that the SNO was supposed to be licensed a year and a half ago, and yet we are still waiting for it, makes me wonder just what the term “eight weeks” means in Department of Communications-speak.
Could it be that it's a date that is just far enough away – not to mention smack bang in the middle of the holiday season – that she is hoping those of us following the story will forget about it and it will be able to continue dragging along at a snail's pace?
Could it be that she was just trying to buy herself some more time in this whole debacle, and hoping that this announcement will stop all those snide remarks about her “applying her mind” to the process?
One thing it certainly is not is a last-ditch ploy to attract a new and considerably richer investor than the two bidders who already showed interest in the 51% stake.
Unless you are a fervent believer in the funny fat guy with the bright red suit and all the presents, there is no way you will believe this interminable process will suddenly be saved by some new investor, riding out of the mist like a knight on a white steed.
No, what we have here is exactly what Ivy suggested right at the start of the second bidding process. Her SNO Working Committee was given power back then to look into the possible amalgamation of several of the initial bids, in order to create a potential single ‘super-bid'.
That is now what we are going to get. She is putting the framework in place to ensure that Two Consortium and CommuniTel have to join forces to acquire the 51% equity stake, partly at least, because this way, there can be no legal challenge from a losing bidder.
While the theory is sound, in that the biggest strengths from such a union would inevitably be carried through into the SNO, along with the minimum of each bidder's weaknesses, the practice is nonetheless flawed.
The window of opportunity for the SNO is already small, and I can't help but wonder how long it will take to get two bidders who up until very recently were bitter rivals to now amalgamate in some way that will not only avoid hurting deals they have already made, or affecting their shareholders, but will allow both sets of senior management to both save face and their jobs.
On top of this, once they have reached consensus, they will still need to merge with the SOEs and Nexus, which will present its own unique set of problems.
Only once this is achieved (and who knows how long such a process might take) will the SNO be able to begin rolling out services and attempting to take on the monopoly in a meaningful way.
Eight weeks? I for one will be very surprised if we have an SNO inside eight months.
Yesterday, the minister announced that the 51% share will be warehoused until a suitable investor is found, although a licence will be issued to an entity that consists of the integrated 30% of the state-owned enterprises (SOEs), the 19% held by Nexus Connexion and the warehoused 51% stake.
Of course, the light at the end of the tunnel was the announcement that the department hopes to have found suitable investors for the 51% stake within the next eight weeks. Yes, you read correctly: eight weeks!
The minister's reasoning behind this is that the government wants to move quickly, because “the window of opportunity for the SNO to be feasible is closing”.
Those of us in the know might be tempted to say that the particular window she is talking about actually closed sometime around May last year, when Telkom officially stopped being a monopoly and its rival was supposed to be ready to challenge it.
Of course, the fact that the SNO was supposed to be licensed a year and a half ago, and yet we are still waiting for it, makes me wonder just what the term “eight weeks” means in Department of Communications-speak.
Could it be that it's a date that is just far enough away – not to mention smack bang in the middle of the holiday season – that she is hoping those of us following the story will forget about it and it will be able to continue dragging along at a snail's pace?
Could it be that she was just trying to buy herself some more time in this whole debacle, and hoping that this announcement will stop all those snide remarks about her “applying her mind” to the process?
One thing it certainly is not is a last-ditch ploy to attract a new and considerably richer investor than the two bidders who already showed interest in the 51% stake.
Unless you are a fervent believer in the funny fat guy with the bright red suit and all the presents, there is no way you will believe this interminable process will suddenly be saved by some new investor, riding out of the mist like a knight on a white steed.
No, no, no!
Unless you are a fervent believer in the funny fat guy with the bright red suit and all the presents, there is no way you will believe this interminable process will suddenly be saved by some new investor.
That is now what we are going to get. She is putting the framework in place to ensure that Two Consortium and CommuniTel have to join forces to acquire the 51% equity stake, partly at least, because this way, there can be no legal challenge from a losing bidder.
While the theory is sound, in that the biggest strengths from such a union would inevitably be carried through into the SNO, along with the minimum of each bidder's weaknesses, the practice is nonetheless flawed.
The window of opportunity for the SNO is already small, and I can't help but wonder how long it will take to get two bidders who up until very recently were bitter rivals to now amalgamate in some way that will not only avoid hurting deals they have already made, or affecting their shareholders, but will allow both sets of senior management to both save face and their jobs.
On top of this, once they have reached consensus, they will still need to merge with the SOEs and Nexus, which will present its own unique set of problems.
Only once this is achieved (and who knows how long such a process might take) will the SNO be able to begin rolling out services and attempting to take on the monopoly in a meaningful way.
Eight weeks? I for one will be very surprised if we have an SNO inside eight months.
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