The liberalisation of the South African telecommunications sector, from the beginning of next year, has prompted the county's fixed-line monopoly, Telkom, to identify network evolution as a key investment focus for 2005.

Telkom CEO Sizwe Nxasana commented yesterday, during the group's interim results presentation, that network evolution is an imperative to transform Telkom from its time division multiplexed network to an Internet protocol (IP)-based next generation network, capable of delivering converged services.

To achieve this, Nxasana said that, while Telkom's mobile and fixed-line businesses will focus capital spend on new technologies in the new year, the group intends to contain capital expenditure within a range of 12% to 15% of overall revenue, which would total about R4-billion. However, he added that IP capital spend could be accelerated.

By next year, Telkom expects to have softswitching capability deployed in its national network to support voice-over IP solutions to provide advanced call control, hosted IP telephony and IP PBX solution.

Nxasana also pointed out that, as part of Telkom's focus on broadband connectivity, it is currently working with Intel to begin trials early next year for next-generation WiMAX broadband wireless networks for South Africa. Once piloted and rolled out, this technology will enable a wireless alternative for the 'last mile' broadband connectivity for business, as well as residential customers.

Advanced work is already under way to identify sites for the network infrastructure and obtain the necessary equipment.

Delivery of the 'last mile' access continued to be one of the biggest challenges facing the ICT industry.

But, while the telecommunications liberalisation will present numerous opportunities for Telkom, it will also effectively spell the end of its monopoly status, forcing the group to provide competitive services and products.

Thus, said Nxasana, in line with delivering services at competitive prices, Telkom yesterday filed its 2005 tariff adjustments with the Independent Communications Authority of South Africa (Icasa) seeking an overall tariff increase for its regulated basket of 0,2% - below government's target inflation range of between 3% and 6%.

This means that international call tariffs will, on average, decrease by 28%, while local long-distance call tariffs will be reduced by 10%.

But there remains a need to rebalance certain tariffs to eliminate any subsidisation and allow for effective competition in all areas Nxasana claimed, which means that local peak calls will increase by 5,5% and monthly subscriptions will rise by 6,3%.

Also part of its competitiveness drive is Telkom's launch of bundled minute packages and calling plans, such as XtraTime and Surfmore Anytime.

Nxasana also commented that Telkom has a succession plan to replace personnel that will leave with the sale of a 15,1% stake in the group, held by strategic equity partner Thintana. Thintana is owned by US-based SBC Communications and Telekom Malaysia. It is anticipated that two Thintana managers, who worked as part of Telkom's management, will mostly likely be replaced by South African staff, possibly as soon as within the next two weeks.

Meanwhile, the Solidarity trade union has slammed the Thintana deal, saying the group is pulling out of South Africa with a profit of R8,6-billion, after advising Telkom to retrench some 30 000 employees.

“The management advice that Thintana provided, at immense cost to Telkom, was to achieve the greatest possible profits and returns for shareholders in the shortest possible time,” the union said in a statement.

“This means that the group had a direct interest in getting rid of workers and charging exorbitant rates in a monopolistic trading environment.”

Solidarity further argued that, during the period of Thintana's ascendancy, the head count in Telkom was reduced from about 60 000 to 30 000, and another 7 602 heads are set to roll over the next three years.