Telecommunications Policy

1
Telecommunications Policy

• Eskom
• Parliamentary Portfolio Committee Presentation
• Date 3 April 2001

2
INTRODUCTION

• Eskom welcomes the Ministers policy
• directions
• We look forward to participating in the
• SNO and ICT sector in a manner which
• enhances the value of our assets for the
• benefit of all South Africans

3
Key Policy Matters

• Managed liberalisation - a prudent approach to
  telecommunications development in SA whilst
  preserving sector value
• Complete PSTS licence including a full mobile
  component
• Separate inclusion of ESITEL and Transtel
• Provision for BEE and participation of HDGs

4
Key Policy Matters (continued)

• Commitment to an aggressive timeframe for
• liberalisation
• Unbundled local loop aspect of infrastructure
• sharing is positive
• Access to 1800MHz and 3G
• Number portability, universal access,
  emergency
• communications, ICT Institute

5
Eskom Position

• Eskom previously put forward its position
• ESITEL and Transtel assets overlap
• Therefore two new full public licences would be
  required to optimally leverage existing State
  assets
• To avoid sterilising either ESITEL or Transtel
  within a single SNO
• To enable formation of a competitive third
  operator
• Thereby to maximise the value to the State of its
  existing assets
• All scenarios must avoid destruction of State
  asset value

6
Value Enhancement Principle

• Inappropriate equity set-aside could result in
  value destruction of State assets
• 21 equity could result in a realisation of only
  ¼ to ½ of the true value of these assets
• Inclusion of both parastatals in the SNO could
  exacerbate possible value dilution
• The 21 would be split, and indeed, over
  duplicative assets
• A number of alternative mechanisms can be applied
  within the announced policy directions

7
The SNO Process

• The detailed steps in the SNO formation must be
  clarified early in the process
• SEPs
• Eskom
• Transnet
• BEEs
• The percentage set-aside for ESITEL and Transtel
  must be informed by the underlying value of the
  assets

8
The SNO Process (continued)

• The tight timeframes exacerbate any lack of
  clarity in the process
• Mechanisms for identifying and funding BEE
  participation should be outlined
• Maximum Regulatory clarity should be achieved
  before the ITA is issued

9
Eskom Telecommunications

• Eskom represents the superior basis for a second
  public telecommunications operator in SA
• Lowest-cost fibre optic network option
• Fastest roll-out speed to enable completion by
  May 2002 (the 14000km project commenced Feb 2001)
• Superior financial capacity
• Best customer ownership (4m) from largest
  corporates to individual consumers
• Existing assets include a national digital
  microwave network (155MB 11 16 960km --11.3
  million Ch km)

10
Eskom Telecommunications (continued)

• Optimal skills and staffing base with experience
  both in large engineering projects (eg Power
  Stations) and Electrification
• Africa presence (eg Lesotho, Kenya) and
  opportunities through power/telecommunications
  expansion strategy

11
Concluding Matters for Clarification

• SNO formation and licence bidding process
• BEE participation
• SEP requirements
• Percentage set-aside for ESITEL and Transtel
• Precise meaning of fixed-mobile services
• Extent of regulatory clarity expected by the time
  of the issue of the ITA

12
Conclusion

• Eskom is fully committed to the Ministers policy
  directives
• We look forward to participating in the SNO
  in a manner which enhances the value and use of
  our assets and skills.