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Is the new entrant telecommunications operator dead on arrival?

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2 Author(s)
Kennedy, I.G. ; Sch. of Electr. & Inf. Eng., Univ. of Witwatersrand, Johannesburg, South Africa ; Van Olst, R.

At AFRICON 2002, the authors presented papers covering the business strategy of a New Entrant Operator (NEO) seeking to provide telecommunication services in South African. Two years on, the Department of Communications announced that the two short-listed bidders would each be awarded a 13% stake in the NEO. The authors here re-model the business plan for the NEO. This work forecasts the financial viability of the NEO. The basic infrastructure for such a second operator exists already in the networks owned by two other parastatals: the electricity generator and distributor and the transport parastatal, who will each be 15% stakeholders in the NEO. We examine the finances of the incumbent operator (IO) and use them to predict market share of the NEO over the next five years. We argue that the NEO will be dead on arrival if the IO deeply entrenches its position in the dominant areas listed. Since the NEO will be carrying bureaucratic baggage from its legacy, it will be prudent for the NEO to focus on green-field technology offerings and new service provision.

Published in:

AFRICON, 2004. 7th AFRICON Conference in Africa  (Volume:2 )

Date of Conference:

15-17 Sept. 2004