The launch of the second operator will break Telkom's monopoly and reduce high telecommunications costs. The chair of the SNO shareholder's steering committee, Karl Socikwa, said that a business model had been designed and along with the shareholders' agreement would soon be submitted to the Independent Communications Authority of SA (Icasa). Icasa has said it will issue an operating license only once the shareholders' agreement has been signed.

Socikwa said all shareholders – Nexus Connexion, Eskom Telecommunications, Communitel, Two Consortium, VSNL and Transtel (of which Socikwa is CEO) – were working towards the earliest possible launch of the new operator.

"We are well on track for a licensing within the next few months, and a business launch towards the end of the year," Socikwa said. He said a plan for the integration of the telecommunications activities of Transnet business unit Transtel and Eskom subsidiary Eskom Telecommunications with the SNO was in the process of being finalised.

"This plan, together with the envisaged capital and funding structure for the SNO, will be included in the body of documents that will be submitted to Icasa for their licence deliberations," Socikwa said.

Telkom, which has budgeted R4.2 billion for broadband technology expansion this year, has signed long-term contracts with 90% of its corporate clients. This will make it difficult for a second operator to penetrate this market.

Socikwa said, "Any new facilities-based operator in the South African market will be up against one of the most entrenched telecoms monopolies in the world."

Telecommunications costs in South Africa remains high. In his state of the nation address President Thabo Mbeki said fixed-line rates were an "unacceptable" 10 times those of developed countries. Source: Business Day