1. 1 MTN PRESENTATION TO THE PORTFOLIO COMMITTEE ON COMMUNICATIONS Hearings on Telecoms Policy Directions 3 April 2001 Irene Charnley – Chairperson, M-Cell Sifiso Dabengwa – MD, MTN SA

2. 100% Transnet BEEG Others 100% 62,5% 35,8% 14,8% 24,0%9,5% 16,3% BIDCO MTN-SA (100%) AIRBORNE (100%) MTN-AFRICA (100%)MTN-SWAZILAND (30%) MTN-INTERNATIONAL (100%) RWANDA (30%) UGANDA (50%) CAMEROON (100%) NIGERIA (80%) M-TEL (100%) I-TALK (41%)

3. 3 Fundamental impact on the telecoms sector:  Total deregulation of mobile market  Partial liberalisation of fixed-line market … unbalanced approach is not leveling the playing field Introduction

4. 4 Will this policy attract investment in the sector?  We need to ensure that the implementation of the proposed market structure, as part of deregulation, is not seen to be “crowding out” private sector investment in the industry  Limited protection against possible abuse of dominant market power by the incumbent monopoly

5. 5 Key issues 1.Fixed-mobile convergence 2.Interconnection 3.Spectrum 4.Additional obligations 5.Under-serviced areas 6.Other issues

6. 6 1. Fixed-mobile convergence Anti-competitive to allow only fixed operators to extend into mobile without allowing mobile operators to extend into fixed-line services –International gateway –Self-provision of fixed links No need to regulate technology – convergence can be enabled through commercial contracts »Let the market decide  Can the market sustain 5 mobile operators? Telkom and SNO to provide fixed / mobile services

7. 7 2. Interconnection Assignment of 1800 MHz should not be coupled with “new” interconnection regime Initial implementation of LRIC only on dominant fixed-line operator - significant majority of originating and terminating traffic on monopoly/dominant fixed line network Regulations to provide for a new interconnection regime

8. 8 3. Spectrum MTN welcomes decision to allocate 1800 by Sept 2001 Pricing should consider affordability of services Large up-front fees stifle investment and innovation Payment through social investment over a period of time, to be considered –eg % of NOI invested in schools connectivity over 15 years  Will duration of service licences be extended to 15 years? 1800 MHz and 3G to be allocated fairly among all operators for an appropriate fee

9. 9 4. Additional services  USF levy on all licensees (max 0.5% of revenue)  Single database for all numbers (incl prepaid)  Number portability  Emergency services  Directory services Impact of these additional services must be assessed in the context of ‘cost of doing business’ – LOWERING INPUT COSTS Practical implementation issues: –High costs may be passed on to consumers –Prepaid database logistically difficult - onus should be on customer –How will existing emergency service structures be integrated?

10. 10 5. Under-serviced areas Support ethos but must be based on sound economic principles Clear definition of “under-serviced areas” required Vital co-ordination role by Universal Service Agency to maximise utilisation of resources  Does the measurement of penetration include fixed and mobile?  Extent of subsidisation? SMMEs and co-operatives to be licensed separately in under-serviced areas (less than 1% penetration)

11. 11 6. Other issues  Universal Service framework should incorporate “pay or play” principle, not both  Policy silent on local loop unbundling – critical to promote competition and prevent wasteful duplication