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Viewing cable 05PRETORIA710, SOUTH AFRICA SELECTS FINAL SNO SHAREHOLDER

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Reference ID Created Released Classification Origin
05PRETORIA710 2005-02-16 15:01 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Pretoria
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS PRETORIA 000710 
 
SIPDIS 
 
DEPT FOR AF/EPS/DKRZYWDA AND AF/S/TCRAIG AND KGAITHER 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA/JDIEMOND 
TREASURY FOR GCHRISTOPULOS, LSTURM, AND AJEWEL 
DEPT PASS USTR FOR PCOLEMAN, WJACKSON, AND CHAMILTON 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECPS ETRD ECON EINT SF
SUBJECT:  SOUTH AFRICA SELECTS FINAL SNO SHAREHOLDER 
 
REFTEL:   04 PRETORIA 5041 
 
          04 PRETORIA 4312 
          04 PRETORIA 3984 
          03 PRETORIA 6384 
 
(U) Sensitive but unclassified.  Not for internet 
distribution.  Please protect accordingly. 
 
1.  (U)  SUMMARY.  Minister of Communications Ivy Matsepe- 
Casaburri announced that she has awarded the remaining 26 
percent in South Africa's Second Network Operator (SNO) to 
VSNL (Videsh Sanchar Nigam Limited), a telecommunications 
firm within India's Tata Group.  The six SNO shareholders 
must now finalize a shareholder agreement and business plan 
before the Independent Communications Authority of South 
Africa (ICASA) can issue the SNO a license to operate.  At 
the moment, stakeholders are optimistic that this may happen 
by mid-2005.  VSNL's inclusion in the SNO and its 
acquisition of Tyco Global Network may also benefit U.S.- 
based Tyco Telecommunications' bid to build the East Africa 
Submarine System (EASSy).  END SUMMARY. 
 
1.  (U) Minister of Communications Ivy Matsepe-Casaburri 
announced February 11 that she had awarded the remaining 26 
percent in the Second Network Operator (SNO) to VSNL (Videsh 
Sanchar Nigam Limited), a telecommunications firm within 
India's Tata Group.  The Minister made her announcement on 
the same day of President Thabo Mbeki's State of the Nation 
address in which he berated South Africa's fixed-line 
telecommunications firm (Telkom) for offering rates that are 
as much as 10 times those of developed (OECD) countries. 
 
2.  (U) VSNL has undergone a gradual privatization since the 
early 1990s with the Indian government currently controlling 
26 percent of VSNL and 45 percent of the Tata Group.  VSNL 
operates a network of 32 earth stations, 12 international 
voice gateways, six operational submarine cable systems and 
22 Internet "points-of-presence."  For the fiscal year ended 
March 2004, VSNL had a net worth of $1.1 billion and a net 
profit of $84 million.  VSNL is also in the final stages of 
acquiring the Tyco Global Network from U.S.-based Tyco 
Telecommunications, one of the world's most advanced and 
extensive submarine cable systems.  VSNL is represented in 
South Africa by Tata Group's South Africa subsidiary, Tata 
Africa Holdings SA (PTY) Limited. 
 
3.  (U) The SNO shareholder structure is as follows: 
 
Tata Africa Holdings (VSNL)   26 percent 
Nexus Connexxion              19 percent 
Transtel                      15 percent 
Eskom Communications          15 percent 
Communitel                    12.5 percent 
TwoConsortium                 12.5 percent 
 
4.  (SBU) The shareholders must now finalize a shareholder 
agreement and business plan before the Independent 
Communications Authority of South Africa (ICASA) can issue 
the SNO a license to operate.  At the moment, stakeholders 
are optimistic that this may happen by mid-2005.  ICASA 
Chairman Mandla Langa told reporters that the SNO should be 
licensed by June.  Transtel CEO and SNO Spokesman Karl 
Socikwa said that Tata Africa was given early access to the 
work done by Transtel and Eskom in order to expedite the 
technical liaising between the shareholders.  A source at 
Nexus Conexxion, the SNO's empowerment partner with legal 
action pending against the Minister of Communications, told 
Econoff that Nexus is pleased with the selection of Tata and 
said that a shareholding agreement is likely sooner rather 
than later. 
 
5.  (U) VSNL's inclusion in the SNO and its acquisition of 
Tyco Global Network may benefit U.S.-based Tyco 
Telecommunications' bid to build the East Africa Submarine 
System (EASSy), an underwater fiber optic telecommunications 
system connecting eastern African nations to the global 
telecommunications network. 
 
FRAZER