The new operator will provide competition in the fixed-line sector for the first time for state-controlled Telkom, which has been criticised by consumer groups for high prices.

"The SNO (Second National Operator) plans to launch in the second half of 2006, though certain services may be able to be provided earlier," a statement said.

"The network shall be built with both convergence and fixed mobile possibilities for the near future."

The SNO is owned by a consortium that includes India's Tata industrial group and Transtel, the telecoms arm of South African state utility Transnet.

The government, including President Thabo Mbeki, has urged Telkom to cut tariffs, which it argues inflates the cost of doing business and deters foreign investors, as well as impeding the rollout of communications to poor communities.

Telkom posted a 35 per cent jump in first-half headline earnings last month thanks to a leaner wage bill following hefty job cuts and bumper dividends from its fast-growing mobile phone unit Vodacom.

But analysts warn that the dismantling of its monopoly will put a brake on growth in coming years.

- Nampa-Reuters

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