SNO Telecommunications (Pty) Limited

Active

In September 2004, the South African Minister of Communications granted a 25-year Second National Operator’s license to provide fixed-line and long distance telecommunications services to SNO Telecommunications (Pty) Limited (SNO-T). The Independent Communications Authority of South Africa (ICASA) formally issued this license on December 9, 2005, following a protracted process that began in early 2002. SNO-T was not expected to commence business activities until the second half of 2006. The shareholding structure for SNO-T was initially as follows: State-Owned Enterprises Transnet (the telecoms arm of the South African train utility Transnet) and Esitel (the telecoms arm of the electricity utility Eskom) each holding a 15% stake; Nexus Connexion (a South African Black Empowerment Enterprise (BEE)) with 19%; and Strategic Equity Partner Company (SEPCo) holding the majority 51% stake. SEPCo, in turn, consisted of strategic equity partners TATA Africa Holdings (Pty) Limited (VSNL) (51%); CommuniTel (an African consortium based in South Africa) (24.5%); and Two Telecom Consortium Limited (a Swedish group) (24.5%). TATA Africa Holdings (Pty) Ltd. was a member of the TATA Group, a large Indian conglomerate with information and communications operations. The project required an initial investment of R7 billion (about US$1.2 billion) over the first four-five years, to be met with a mix of debt and equity. The SNO, which was licensed at an initial cost of Rand 100 million (US$15 million) was obligated to making residential and business fixed lines available to half of the South African population in major cities within five years of start-up and to 80% of the entire country within a decade as a license condition imposed by ICASA. By end 2005, Tata Holdings had committed R1,5bn to the project while parastatals Eskom Telecommunications and Transtel had spent R2bn between them on network capital expenditure. SNO-T was to initally use the networks of Transtel and Esitel to compete with Telkom. SNO-T was also to roam on Telkom's network for a period of two years after its launch, during which time it would have to pay for that access. Telkom was to have monopoly of the local loop for at least two more years after SNO-T’s launch. Service was expected to be launched initially in the municipalities of Johannesburg, Tshwane, Mangaung, Cape Town, Mogale City, Ethekwini, Nelson Mandela Metropolitan, Buffalo City, Mafikeng, Mbombela, Polokwane, Sol Plaatjie, Msunduzi, and Ekurhuleni. Telkom SA had projected that it might lose 10%-15% of its market share to the second national operator in the first five years of SNO-T’s operation. In June 2008, Tata Communications increased the stake in the company to 56 per cent from 26 per cent. The project became operational in May 2008. http://www.hindustantimes.com/news/181_1689385,00020013.htm The total investments for SNO project is about $1.2 billion and VSNL along with Tata Group's African holding company Tata Africa will invest over $200 million in the venture.