Brian in the scheme of things, our consensus is that the ownership of the EASSy cable is not
going to have a "big" ROI and OWNERSHIP does not guarantee ACCESS. There is going to be
ROI but not as "huge" to make pricing the cable beyond affordability - the devil is in the but i
think trading the stocks on of the cable on the stock market could provide flexibility and an
exit strategy for any investor in the future.
My view on OWNERSHIP is that it must be multi-stakeholder which is a combination of government, private sector, civil society and consumer. Am at Highway Africa and someone just asked me how does Civil Society and Consumers own part of EASSY.
My sugestion is to float a government guaranteed stock on the stock markets in the various countries and raise capital so that the average "joe bloe" on the street can own part of EASSy - i have sent a private memo on this to the E-African Comission to consider how to proceed alone this line though i must admit it is not an "EASY route for EASSY". For private ISPs and other investors my proposal is to lower the equity capital to between 500,000 dollars and a million dollars so more private African indegenous "investors" can put in their money.
Specifically on the issue you raise, i think we should go pass even the debate on whether this is a domination fight between South African and Kenya as well as whether Telkom South Africa would invest or not. We need to rather create a balance that meets the "eye" and that means engaging on the current protocol and reaching a compromise rather taking entrenched positions which is just waiting everyone's time.
Eric here
---------- Original Message ----------------------------------
From: Brian Longwe
>Funny to hear this after Kenya's strong action. Looks like these
>concerns about making profit off the cable (like SAT-3) might be some
>of the underlying issues that Kenya was concerned about. It is
>interesting hearing. Especially interesting is the way in which
>Telkom SA management is linking the EASSY project directly to SAT-3
>"...Telkom has warned its investment in EASSy may be jeopardised if
>government interferes in fees it charges for access to another cable,
>Sat-3, around the west coast and connecting Africa to Europe. The
>communications department has debated forcing down the price Telkom
>charges cellular networks and internet service providers."
>We better make sure we don't allow them to force a similar pricing
>model (read "investment criteria") on EASSY
>Regards,
>Brian
>TELKOM WARNS IT COULD CANCEL INVESTMENT IN UNDERSEA LINK
>Telkom South Africa might abandon its planned investment in a $300m
>undersea telecommunications cable designed to boost Africa's
>bandwidth if the return on its spending was insufficient, Telkom CEO
>Papi Molotsane said.
>Telkom is one of the main backers of the 9900km East Africa Submarine
>System (EASSy) cable. But regulatory issues and governmental pressure
>to make the cable's bandwidth affordable may prevent it from making
>enough profit to justify an investment, Molotsane said.
>In an interview, he said EASSy was essential to increase the
>bandwidth available to 24 countries around eastern Africa, but
>Telkom's participation was not guaranteed.
>Telkom would sell its capacity on the cable to smaller companies that
>provided voice and data services, including internet service providers.
>"The overriding issue that we have to evaluate is the impact EASSy
>will have, the investment it will require, and the return we will
>get. If it doesn't make sense for our shareholders we will have no
>reservations in pulling out," he said. "If it doesn't meet our
>investment criteria and there are no returns, it doesn't make sense
>to invest."
>About 30 operators are in the consortium that will finance and own
>the cable. As Telkom is one of the largest, its input could be well
>above $10m. However, the project is a Nepad initiative, allowing
>governments to call the shots on how much the members charge other
>operators to access the bandwidth.
>Telkom is negotiating with Nepad officials to work out how much
>profit margin it could charge. "We are in discussions right now with
>all the players and putting the numbers together, and a decision is
>imminent," Molotsane said.
>"We support Nepad, but we have to do things that really make sense
>for our shareholders, who expect returns on their investment. We have
>indicated to the (communications) minister that if it doesn't make
>sense we will not go forward. At this stage it is difficult to say
>whether we will stay or pull out."
>As well as concern over the profit margin, Telkom has another worry.
>"Some of the partners may be able to sell capacity to our country but
>we may have challenges selling capacity to their countries because
>their legislation doesn't allow that," said Molotsane.
>Telkom may decide the benefits of more bandwidth for Africa justify
>its investment in spite of its reservations, particularly with the
>2010 World Cup demanding enormous capacity in and out of SA. "We are
>concerned by some of the regulatory issues, but that could be
>overcome by the benefits that EASSy will bring to the African
>landscape, so we could sacrifice some things to have the increased
>bandwidth," he said.
>Telkom has warned its investment in EASSy may be jeopardised if
>government interferes in fees it charges for access to another cable,
>Sat-3, around the west coast and connecting Africa to Europe. The
>communications department has debated forcing down the price Telkom
>charges cellular networks and internet service providers.
>The department has not intervened so far, and Molotsane believes the
>Sat-3 members will be able to continue setting their own fees even
>after their exclusivity to the bandwidth expires next June.
>(SOURCE: Business Day)
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