Cape Town (Reuters) South Africa on Thursday revised the ground rules for enhanced telecoms competition, tabling changes to a law that will encourage competition amongst fixed-line phone operators and protect mobile operators. 

Political sources said President Thabo Mbeki's cabinet approved eleventh-hour changes to the Telecommunications Amendment Bill on Wednesday, 24 hours before it was to be put to a vote in parliament. 

The new law, which officials expect to see enacted within weeks, will lay the foundations for the partial listing of the largely state-owned Telkom phone company by end-March 2002 and the licensing of its first fixed-line rival by next May. 

"They are moving in the right direction, creating some stability in the sector through compromise," said Meloy Horn of Merrill Lynch. 

"However, until the bill is finally sealed and signed off, unfortunately we still have regulatory risk." 

Telkom is 30% owned by Thintana, a consortium of SBC of the United States and Telekom Malaysia.

Potential investors had said after the draft text was finalised by parliament's communications committee last week that it would inhibit competition and kill all interest in the proposed second national operator (SNO) licence. 

They criticised the committee's last-minute reversal of an agreement to set a 2003 deadline for carrier competition amongst fixed-line operators, known as carrier pre-selection. But the deadline was reintroduced on Thursday. 

Investors also objected to the terms of a right given to fixed-line operators to use wireless technology over the last leg of a connection, saying it was so loosely defined that it would encroach on the terrain of mobile phone operators. 

That definition was refined on Thursday to prevent cell-to-cell call handover by fixed-line operators using wireless for the so-called last mile of a connection. 

Opposition legislator Suzanne Vos told Reuters the changes had been agreed late on Wednesday to make the Bill more supportive of the proposed second national operator (SNO) and to protect mobile operators from unfair competition. 

"Until last night, this Bill prioritised the views of the telecommunications monopoly, Telkom, and effectively entrenched Telkom's monopoly until 2005," she told parliament later. 

She said that following the changes the Bill would promote competition and revive interest in the SNO licence. 

M-Cell Commercial Director Irene Charnley told Reuters the government decision to set a 2003 deadline for the introduction of carrier competition would ensure reasonable competition. 

"Our participation will depend on the details of the ITA (invitation to apply), but at this point it looks very positive," she said. 

"Carrier pre-selection is very significant for the consumer and we welcome that. They have put a competition enabler in place that will allow the SNO effectively to compete," she said. 

Saudi-backed Cell C, which is launching South Africa's third mobile network in November, welcomed the changes, particularly the clarification of the definition of fixed-mobile services. Cell C Chief Adviser Paul Doany said they meant "no call handover, full stop".

Communications Committee chairperson Nkenke Kekana told parliament a key purpose of the Bill was to encourage the provision of telephone services to poor rural areas largely overlooked under white apartheid rule, which ended in 1994. 

There was confusion in parliament about how to handle the rare last-minute changes, but officials said they would be introduced in the second chamber and the revised text would probably next week go back to the National Assembly for a final vote.