How incompetence of ministers cost us a vital asset
Last week’s sale of Neotel concludes what has been a spectacular failure of government policy. Neotel was created in 2001 to bring competition to Telkom’s then fixed-line monopoly, with a licence for the Second National Operator (SNO).
The sale is also an indictment of the incompetence of successive communications ministers — barring the brief efficiency of Yunus Carrim — whose bungling has cost the country untold billions in overpriced telecoms and lost opportunities.
The only travesties to compare in scope are the long drawn-out spectrum reallocation for digital terrestrial television (DTT) — with its related encryption of set-top boxes court cases — and the horror show that is Hlaudi Motsoeneng’s censorship of the SABC.
The SNO was supposed to bring greater competition to SA telecoms, where Telkom, which was then a rampant abuser of its state-sanctioned monopoly, had the country over a barrel with overpriced voice calls and appalling Internet offerings.
Neotel was cobbled together from the telecoms assets of Eskom and Transnet; the two competing bidders (Two Consortium and CommuniTel); the state; and BEE partner Nexus Connexion.
The bidding process was so fraught that then communications minister Ivy Matsepe-Casaburri selected both Two Consortium and CommuniTel and gave them 13% each instead of the original 26% they were bidding for. The consortiums — whose bids were both criticised by a feasibility study — included, respectively, Tokyo Sexwale’s Mvelaphanda Holdings and the Umkhonto weSizwe Military Veterans Association.
It was a clash of political interests over telecoms necessity long before the licence was even granted. As the eventual outcome would reveal, it was a compromised process in almost every regard.
The long-delayed licensing process (bidding began early in 2002, the winners were announced in 2003 but only finalised in 2005) meant Neotel, as it would be named, had arrived after its original purpose (to compete in landline voice calls) was effectively obsolete.
By the time Neotel unveiled its orange corporate colours and its head office in Midrand, the move from landlines to cellphones was in full swing.
India’s Tata Communications would become the majority shareholder, and it must be relieved to now be exiting.
Every new twist in this contorted saga was dealt with by each subsequent communications minister with further incompetence and a clear lack of understanding of the importance of telecoms and Internet access in this new age of the knowledge economy.
Matsepe-Casaburri’s dogmatic protectionism of Telkom — which has finally shown signs of life and competitiveness under CEO Sipho Maseko — seemed like a low point for the department of “mis-communications”, as the tech and telecoms industry jokingly calls it.
That was until minister Faith Muthambi’s error-ridden tenure began, where she unravelled the good work done by Carrim on the set-top boxes required for DTT, even going against her own party’s policy. SA is now a year past the June 2015 deadline to switch from analogue to digital, and free up spectrum for cellular operators who can make better use of it for wireless broadband.
Seeking Neotel’s rich vein of this spectrum, Vodacom in March walked away from a R7-billion offer it made in May 2014, after competition authorities dragged their heels.
Neotel will now be sold for R6.5-billion to Liquid Telecom — a subsidiary of Econet Wireless which is headquartered in Mauritius, and is the brainchild of Zimbabwean entrepreneur Strive Masiyiwa — and will be part of a pan-African broadband network.
The rest of Africa will benefit more from what should have been an SA success story, all thanks to a series of clueless party hacks who as communications ministers have served narrow interests instead of the voting populace.
Shapshak is editor and publisher of Stuff magazine