The heads of agreement, signed with the Department of Public Enterprises, provides for the SNO to have access to an inter-city, high-capacity, full-services network, the SNO said in a statement.
The arrangement came close on the heels of the SNO's purchase of high-capacity fibre-optic network assets from Transnet.
The network was originally created by state-owned enterprises Eskom and Transnet, who are also shareholders in the SNO.
"The network/asset transactions will go a long way in allowing the SNO to deploy a high-capacity national telecommunications network based on leading-edge convergent technologies," said Ajay Pandey, the SNO's managing director in a statement.
The SNO would switch on international wholesale services at the end of August and business services by the end of this year. It would be the first full-scale, national infrastructure-based competitor to Telkom and was expected to help reduce high telecommunications costs in South Africa.