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Time to free up SA’s telecoms market

South Africa will need to become Internet savvy in order to compete globally, argues ADRIAAN GIE, CEO of Plusto.com, a business-to-business e-trading platform launched to the SA, Indian and Chinese markets last month.

It is time for Communications Minister Ivy Matsepe-Casaburri to change her stance on South Africa’s telecoms legislation.

While South Africa may be a leader in internet connectivity across Africa, the country lags behind countries such as Morocco, Egypt and Nigeria in terms of market competitiveness.

A severely controlled and conservative telecoms legislation that repels competition leads to other service providers being shut out of the market while Telkom holds South Africans at ransom by charging exorbitant connectivity fees.

For too long the Minister has stifled economic growth in South Africa by refusing private companies entry to the market. If government’s focus is on increasing trade and commerce between South Africa and the rest of the world, then this is not the way to go about it. In addition, the price of broadband in South Africa is exorbitant compared with international standards:



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Posted in the category: Economy, Technology, Trends

Telkom confirms sale of Vodacom

Telkom today confirmed the key terms of the sale of a 15% stake in Vodacom, South Africa’s leading mobile phone operator, to UK-based Vodafone Group and the intended listing of Vodacom on the JSE.

Telkom formally confirmed today that a 15% stake in Vodacom will be sold to Vodafone for R22.5bn in cash, less Vodacom’s attributable net debt of R1.55bn. Telkom will distribute 50% of the after tax proceeds from the sale transaction to Telkom shareholders by way of a special dividend. The dividend will be paid upon closing of the transaction, which is expected to take place in the first half of 2009.

The transaction is subject to approval by 75% of Telkom shareholders, the competition authorities and the Independent Communication Authority of SA (ICASA). Irrevocable undertakings in support of the transaction have already been received from Telkom’s largest shareholders, the South African Government and the Public Investment Corporation (PIC).



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Posted in the category: Economy, News, Technology

WiMAX delays dampen impact in SA

Limited roll-out of WiMAX has resulted in dampening of its potential impact, according to a new research report from World Wide Worx.

Delays in the award of licenses for providing the new WiMAX high-speed wireless broadband service to businesses and consumers and the limited roll-out of services that have been licensed has resulted in dampening of its potential impact.

WiMAX in SA 2008This is the core conclusion of the first study on the impact of the technology in South Africa, conducted by World Wide Worx. The report, “WiMAX in SA 2008: Year Zero”, released yesterday, shows that only those companies that have already deployed WiMAX have appreciated its impact.

These companies are all using Telkom’s scaled down version of WiMAX, which is provided only where its ADSL fixed line service is not available, and only at ADSL-type speeds. WiMAX can theoretically offer speeds of up to 70Mbps, as opposed to ADSL’s fastest option in South Africa of 4Mbps. Even at far lower speeds, however, the potential offered by WiMAX is not yet on the horizon, since no serious competition exists to spur its roll-out.



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Posted in the category: News, Technology, Trends

Telkom Internet set to dominate dial-up

What it couldn’t do through the courts, Telkom is now attempting to do through good, old-fashioned competition: dominate dial-up Internet access in South Africa. This week’s annual results were highly revealing not only for the dazzling financial performance Telkom has turned in, but also for the trend lines that show its success at moving into fields some would regard as outside of its ambit.In 1996, Telkom attempted to use the courts to have all Internet Service Providers (ISPs) in South Africa declared illegal, or at least to have them meet regulatory requirements that could have shut down the industry. Telkom lost the battle, although it never conceded that the legal battle was over.

It was a mystery why Telkom should take such an antagonistic view towards what were some of its best customers, and those internal politics have remained an enigma.

In the meantime, however, they tried a far more effective strategy, but one that raised valid protests that they were competing against their own customers: they started an infrastructure provisioning ISP, SAIX, and a dial-up ISP, Intekom. The latter was always something of a maverick, with its own culture and a solid and loyal customer base, but one that was never a serious challenge to larger ISPs.

Then they launched Telkom Internet, and absorbed Intekom back into the fold and back into the corporate culture. Now they went the obvious route: using their massive billing run to market the ISP to the phone-using masses. A year ago, they had 98 000 customers on their books, making them the fourth largest dial-up ISP in South Africa. It was obvious, then, that they were going to challenge number two and three, Tiscali World Online and Absa Internet, before long. And so they did.

Their latest annual results show a huge 44% growth for Telkom Internet, to 142 000 subscribers, making them the second largest ISP in the country. And, while MWEB still enjoys a substantial lead, they are anxiously looking over their shoulders. Two years from now, the unthinkable may become reality: MWEB may become number two in the dial-up market.

That does not, of course, make Telkom the best ISP, but their price advantage is enough to deflect attention from their lack of a content offering and the tremendous value-add that MWEB builds into their packages. At the same time, of course, Telkom is making hay while the SNO fails to shine. In the absence of a second network operator, Telkom happens to control many of the fixed costs faced by ISPs, which prevent them from competing effectively on price with their own telecommunications provider.

Obviously it’s not fair. But using unfair business advantages to destroy the competition is a step up from using the courts. The flip side of the coin is that, when Telkom no longer has the monopoly, it should expect no favours from the competition.

  • Arthur Goldstuck is editor of The Big Change and managing director of World Wide Worx. He can be contacted by e-mail on mailto:arthurg@internet.org.za

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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