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AFRIK-IT  October 1999

AFRIK-IT October 1999

Subject:

Re: State of the Continent: ICT

From:

Jeffrey Cochrane <[log in to unmask]>

Reply-To:

African Network of IT Experts and Professionals (ANITEP) List

Date:

Sat, 16 Oct 1999 19:36:55 -0700

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (119 lines)

Greetings Afrik-ITes!

There's an annoying bug in the latest Pegasus Mail.  I've spent the
last week demonstrating to myself how it works -- my massive
email filing system simply disappeared, but fortunately it was
merely the indexing system that collapsed.  The files themselves
were (tediously) recoverable from disk...  If anyone needs a lesson,
let me know.  I now consider myself an expert on the hierarch.pm
file -- I strongly urge you to back it up each time you add a folder or
tray in the latest Pegasus, as it reportedly corrupts easily.

Thanks to Henry for that absolutely superb comment.  Just so I
understand properly, a few clarifying questions...

On 13 Oct 99, at 10:14, Henry Watermeyer wrote:

> With the privataisation of the telco into TELKOM SA, with
> shareholdings by the South West Bell Corporation of the USA and
> Malaysia Telecom, we now see the financial statements of TELKOM.
> These reflect significant profits over and above the investement
> being made in expanding and upgrading the network prior to
> deregulation in about three years.

Fascinating!  Can these financial statements be shared?  I wouldn't
mind having a copy, which I could then summarize for Afrik-IT.  Up
to now most have simply speculated on the cost-price divide based
on estimation of costs.  Would be nice to have some solid data,
even if generalizing from South Africa to the rest of the continent
can be perilous.

> What the US donors, including the largest individual shareholder in SBC, are
> saying is that it must be possible for the reseasrch & education sector, in
> our specific case, to be charged at a more affordable, by which they mean
> sustainable, level so that the projects they fund do not end up struggling
> while we see large profits for the telco. (They also object to paying Value
> Added Tax on the spending associated with their funding but thats another
> story)

You are saying there is a donor of some kind that is the largest
individual shareholder in SBC?  Some kind of foundation, I
presume?  Who is this donor?

> SBC is not an investor in Telkom SA out of the goodness of its
> heart. It is looking for returns on its investment which are higher
> than it can achieve in the highly regulated market back home.

Do you mean "DEregulated market back home", given that
competition for trunk calls in the USA has driven prices to
astoundingly low levels?  Or do you truly mean "regulated market
back home" focusing perhaps on the local calling area where
carriers are generally still afforded a regulated and specified rate of
return by government regulators that is perhaps lower than what
they might expect in South Africa?

> Donors, because of their typically high profile parents, are very often the
> only people who have the opportunity and the ability to influence the
> conditions that are written into the shareholders agreements.

Interesting.  So it sounds like the strategy you are pursuing is to
work in partnership with the shareholders of companies that are
purchasing newly privatized African telecoms operators.  And some
of these shareholders are themselves charitable foundations
(donors).

I suppose what happens is that wealthy industrialists in the USA
and elsewhere, such as Andrew Carnegie who was a big friend of
libraries, leave a substantial portion of the wealth in a charitable
foundation.  These foundations then invest the funds for shares of
profitable corporations, and use the dividends from those profits to
do charitable work.  You're saying one foundation, perhaps
Carnegie itself, has invested funds in Southwestern Bell, a
traditionally solid profit maker in the USA.  As a shareholder, the
foundation gets votes at annual meetings for each share, and thus
can influence the Board of Directors of the Company to interject
more than a simple profit motive into the company's operations.

> I am fortunate enough to be part of the SA negotiating team which
> is trying to retofit a solution with the help of the US Donors but
> it would have been much better done before the government sold part
> of Telkom SA to SBC and Malayasian Telecom.

Thus you are saying that governments interested in privatizing their
telecoms operations should consider broad national interests in
setting the terms of the privatization, yes?  Of course, this could
substantially reduce the amount of money a private firm would be
willing to pay government, would it not?

For example, if a parastatal telecoms is sold to a private firm
without any universal service requirement, and with continued
monopoly privileges, the private firm might pay quite a high price
indeed for anticipated high future profits.  If however the private firm
is required under the terms of the sale to provide universal service
and to compete with any other private firms that might decide to
enter the market, then perhaps the private firm would not pay as
much.

Do you think this had something to do with how the transaction
was handled in South Africa?  Government needed massive and
immediate revenues from the sale, perhaps to pay for its
tremendous public housing programs or to subsidize electricity
arrears, perhaps to stave off civil unrest.  Is that what happened?

> Hope this gives you some food for thought.

In tremendous quantities, multiple courses.

Cheers!
Jeff @ Nairobi

----
Information and Communication Technology Programs
USAID/REDSO/ESA
Tel +254 (2) 862400 x2762
Email [log in to unmask]
Email [log in to unmask]
PO Box 30261
Nairobi
KENYA

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