No comment from firms
September 17, 2009
By Thabiso Mochiko
Telkom was said to be in discussions with Hong Kong-listed pay-TV and telecoms provider PCCW about a possible deal between the two firms, a source close to the talks said yesterday.
The source said if the discussions were successful they could result in a co-operation agreement similar to the one with US-based AT&T or an exchange of shares.
Telkom's chief executive, Reuben September, would not confirm nor deny that the talks were taking place, saying that Telkom was "always in talks with international companies".
PCCW refused to comment, saying that it did not comment on market speculation.
PCCW provides fixed and mobile phone services, pay-TV and internet TV, contact centre and other telecoms services in the Americas, Africa, the Middle East and Asia.
In April, Telkom announced it had signed a memorandum of understanding with AT&T that allowed the two firms to tap into each other's networks and explore opportunities in areas such as technology data centres in sub-Saharan Africa.
A similar partnership with PCCW, if the talks reach fruition, could boost Telkom's plans to further expand its network into other countries.
September said in April at the AT&T announcement that the strategy was to grow Telkom's footprint geographically and across the continent, not only through acquisitions, but also through partnerships.
The source said the talks were in the early stages and therefore Telkom had not yet issued a cautionary.
Telkom has operations in Nigeria, through struggling entity Multilinks, and in 10 other countries, including Namibia, Kenya, Tanzania and Uganda, through its acquisition of MWeb Africa and Africa Online.
Telkom will venture into the cellular market by launching its own products after it sold its shares in Vodacom. September said yesterday that the group had concluded its comprehensive mobile market research in South Africa and was finalising its business plan.
The study was to find opportunities for Telkom in the South African market, which had a SIM card penetration of 100 percent. He added that Telkom was in talks with two of the three cellular operators - MTN, Cell C and Vodacom - to form a roaming agreement.
Telkom would launch mobile business at a time when interconnection rates were expected to fall - a boost to its operations.
September would not comment on the rate that the group would prefer. "Interconnection is a major aspect of our mobile strategy. It's a very price-sensitive matter and we will make a formal announcement to the shareholders," he said, adding that the group would join in the talks with network operators.
Cellular operators pay each other R1.25 for carrying calls on each other's networks. The rate has come under scrutiny with the portfolio committee on communications calling on operators to face public hearings over the high fees next month.
Vodacom said yesterday that the biggest single operating cost component for every cellphone call was the cost of transmission lines, which operators had been reliant on hiring from Telkom in past years.
"This cost must also be taken into account when interconnect rates with Telkom are renegotiated," said Pieter Uys, Vodacom's chief executive.
"The Independent Communications Authority of SA must apply their minds in a way that does not financially damage any operator by their ruling since this would simply reduce competition in the industry and discourage investment in telecoms infrastructure," Uys said.
Shares in Telkom declined 0.46 percent yesterday to R43.70.
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