Bidders

Gondwana Telecom Nexus Connexion Aruna Telecoms Umsingizane Ozi Thingo OneTel Buatel Reliance Networks

To further that policy, 19% of the new company is set aside for black entrepreneurs, and the seven bidders will know on 1 July who has been successful.

The rest of the company will stay in state hands, being shared between the telecoms arms of state transport group Transnet, and public power utility Eskom, whose pre-existing infrastructure will help the new operator get off the ground.

Sticking points

The move has caused friction with the Independent Communications Authority of South Africa (ICASA), which believes the current structure is illegal and that all 70% should be sold at the same time.

But after months of delays, the government is pressing ahead with liberalising the telecoms market.

The mobile market is already largely liberalised, and Telkom loses its monopoly on fixed-line calls on 7 May.

Investment

The gap of at least a year before a new operator is solidly up and running means that Telkom's own partial privatisation - due in March 2003 - should still raise the billions of rands on which government spending plans are based.

The new operator will require at least 10bn rand in capital expenditure, according to OneTel, one of the black empowerment groups bidding - although some estimates go as high as 12-20bn rand.

The 19% stake means an investment of about 1.5bn rand, half in debt and half from equity, the company told Reuters.

The new company will probably concentrate on the corporate and data markets, rather than going for the low-margin consumer segment, a spokeswoman said, which should help secure the support of financial institutions.