A wholesale open-access network (Woan) in Mexico, designed to break the dominance of the incumbent telecommunications operator and once lauded by South Africa’s government, has been placed into bankruptcy protection.
Reuters reported on Wednesday that Altán Redes, the company developing the Woan known as Red Compartida, filed for bankruptcy on Tuesday. The network was created to curb the dominance of America Móvil, controlled by billionaire mogul Carlos Slim. The network will continue operating – for now.
South Africa’s planned Woan — a much-derided concept among local operators and telecommunications experts — was partly modelled on Mexico’s experience. It was lauded by former communications minister Siyabonga Cwele, who even reportedly travelled, with a South African delegation, a few years ago to meet with Mexican officials to learn about the country’s experiences.
Indeed, the Mexican plan has often been held up by the South African government as an example of a successful Woan, the type of network it’s been keen to roll out in an effort to make the local telecommunications market more competitive – government has long bemoaned Vodacom and MTN’s market “dominance”.
South Africa’s Woan is a government-created concept meant to encourage competition at the services layer, instead of the infrastructure layer, by creating a private sector-led wholesale entity with multiple investors able to serve Internet service providers and others.
Monopoly
The Woan is set to enjoy special offtake agreements mandated by government as well as cheap access to spectrum. The rules mean that Vodacom and MTN will be required to buy 30% of the new entity’s available capacity. Cwele had previously wanted to gift the Woan a monopoly over new spectrum, threatening investment in South Africa’s telecoms industry. The minister was removed from the portfolio in 2018 by President Cyril Ramaphosa and replaced by his deputy, Stella Ndabeni-Abrahams, who has taken a less hostile approach to private enterprise.
However, the failure of the company building the Red Compartida network in Mexico — one of only a handful of markets that tried to implement the model – once again throws the South African project into serious doubt.
Few commercial entities have publicly expressed interest in investing in the Woan. A notable exception is Remgro’s telecoms infrastructure business, CIVH, though CEO Raymond Ndlovu expressed concern in an interview with TechCentral last month about how long it is taking to get off the ground. Telkom has also previously shown an interest in the Woan, though has made no firm commitments. — (c) 2021 NewsCentral Media
