BRIEFING NOTES ON NEPAD ICT BROADBAND NETWORK

1. BACKGROUND

The NEPAD Heads of State and Implementation Committee prioritised the NEPAD Terrestrial and Submarine (EASSy) Broadband project and the associated NEPAD broadband access fibre optic project for landlocked countries.

The objective is to link 23 countries in Eastern and Southern Africa to each other and to the rest of the world through linked terrestrial and submarine cable networks. (Please refer to the attached 4 Slides for a graphic presentation.)

The NEPAD ICT BROADBAND INFRASTRUCTURE NETWORK, which has a terrestrial and submarine (EASSy) components, will be built based on NEPAD Principles of African ownership and leadership, being anchored on Africa's resources and the resourcefulness of its people, and supporting African economic integration.

2. DISCUSSION

The networks will be developed within a policy and regulatory framework established by the Protocol whose objectives include

· open and non-discriminatory access to the networks by authorized entities, which will access bandwidth at the same price per unit, irrespective of whether they are shareholders or not. This is essential to reducing communications costs in the region;

· the establishment of Special Purpose Vehicles (SPVs) that will own, operate and maintain the networks, and

· a regulated return on investment to further ensure a lower cost to communicate.

The Protocol also provides for the harmonization of the ICT policy, legislative and regulatory environment in the region.

3. STRATEGIC ISSUES

a) The policy objectives of governments in the development and operation of the network will be upheld by the exercise of a golden share on the board through an appointee of the Inter Governmental Assembly (IGA).

b) The network will be developed, owned, operated and maintained by SPVs with three categories of shareholders:

I. African licensed telecommunications operators (predominant category);

II. Non-operating entities (which could be an entity established by a government such as an educational network or an investing company such as a bank) to be identified by countries and approved collectively by the IGA; and

III. International companies approved collectively by the IGA

c) There are three types of SPVs:

I. Terrestrial SPV is based on equality of share holding by the entities.

II. Submarine SPV is a hybrid. It is made up of an African-led SPV (with the same characteristics as the terrestrial SPV) and individual companies, which will most probably be foreign. The African-led SPV will be a predominant shareholder in the Hybrid SPV.

NOTE 1: The Hybrid SPV was developed to accommodate the wishes of some companies and the DFls. Their proposal was however amended to ensure that we facilitate foreign investment without opening national markets to foreign operators not licensed in those markets.

NOTE 2: SADC Ministers responsible for ICTS resolved that all SADC companies would participate in the hybrid SPV through the African-led SPV only.

NOTE 3: The advantages of having an SPV is that it can, on the basis of its business plan, borrow capital thus eliminating the potential for further indebtedness by individual countries and companies.

CONCLUDING NOTES

a) The larger the number of countries that sign the greater the beneficial political (including security) socia-economic, and commercial impact on region.

b) The larger the number of African companies that participate the more affordable the equity contribution per company and the less the need for large debt.

c) Twelve out of the desired 23 countries have now signed making it possible to proceed speedily with the project to meet the 2008 timeline for operation in readiness for 2010.

d) The collaboration among several countries of the region on this unique project and its common and equal ownership by many African companies, constitute an important element of making the 2010 FIFA World Cup an African World Cup through an ICT Broadband network built together in the spirit of NEPAD.