SA Telco with Tata Holding to kick off soon
Economic Times — February 21, 2007

South Africa's new telecom infrastructure company InfraCo, in which the Tatas (through their long distance arm VSNL) have picked up 26-per cent stake, will start operations in March. The announcement of the company's launch in March, in which the South Africa government owns a controlling stake, was made by the country's minister for public enterprises, Alec Erwin.

"Studies have shown that affordable national long-distance and international connectivity would have a favourable impact on pricing and availability of broadband in South Africa," Erwin told the media in South Africa.

InfraCo, which the South African government is creating as a direct intervention to reduce telecom costs in the country, will provide long distance connectivity on a cost basis to South Africa's second telecom operator Neotel. The Tatas, via VSNL, own 26 per cent in Neotel.

InfraCo will not have to set up telecom infrastructure from scratch as it has bought thousands of kilometres of fibre network across South Africa from state-owned companies Eskom and Transnet. This gives InfraCo access to electricity supply company Eskom's thousands of kilometres of fibre optic cable installed along the country's power lines, and also transport and logistics company Transnet's optic network across South Africa.

InfraCo will provide bandwidth to Neotel, which will help the latter to reduce operational costs massively and compete head-on with Telkom - South Africa's only fixed-line service at present.