Korea’s KT Corp appears once again to be in discussions with Telkom, this time over the sale of the partially privatised South African telecommunications operator’s Internet service provider assets elsewhere in Africa.
According to a report in Korea IT Times, KT Corp is planning to acquire iWayAfrica from Telkom for about 20 billion Korean won, or about R165m. Telkom owns 100% of iWayAfrica.
If the R165m figure quoted by the Korean publication is correct, it means Telkom will take a bath on its investments in the business, which totalled at least R900m from 2007 — and that’s not taking into account hundreds of millions of rand in impairments.
A Telkom spokesman could not immediately be reached for comment.
Telkom created iWayAfrica in 2010 by merging the businesses of Africa Online, Afsat Communications and MWeb Africa, companies which were bought by the South African operator between 2007 and 2009.
Telkom paid R150m for Africa Online alone, and spent a further R165m on funding it operationally. It bought MWeb Africa from media giant Naspers for R624m.
However, in the 2012 financial year, Telkom took a R569m impairment related to the goodwill and assets of iWayAfrica. For the year, the company contributed R368m to group revenue.
iWayAfrica is not Telkom’s only disastrous expansion elsewhere in Africa. It poured more than R10bn into Multi-Links in Nigeria, extracting no profit in return. It has since disposed of the Multi-Links business.
iWayAfrica has points of presence in more than 40 countries and specialises in both satellite and terrestrial access services.
KT Corp had previously made an offer to buy 20% of Telkom’s equity as part of a deal to come in as a strategic equity partner and to provide management services. The deal had enjoyed the support of former communications minister Roy Padayachie, but the transaction was blocked at cabinet level at the recommendation of his successor, Dina Pule.
According to Korea IT Times, the acquisition should help KT create synergies in its satellite business. The report says KT recently gave up on efforts to buy Morocco’s largest telecoms operator, Maroc Telecom, from Vivendi because of fears the acquisition could be too big for the Korean firm.
Maroc Telecom is worth about a third more than KT Corp. — (c) 2013 NewsCentral Media
