Telkom has confirmed one of the worst-kept secrets in South Africa’s telecommunications industry: that it is in talks with mobile operator MTN about a deal involving its loss-making mobile division.
It confirmed to shareholders by way of a statement on the JSE’s Sens news service on Thursday that it has entered into negotiations with MTN South Africa. It teased out a few more details, saying the talks revolved around reaching agreements involving the “potential outsourcing of the operation of the Telkom radio access network” to MTN.
In mobile communications, the radio access network is the wireless component of an operator’s network through which consumers connect to the core network. It involves the sections of the network that connect end-user devices to wireless base station infrastructure.
Telkom said, too, that it was in talks with MTN about a “potential expansion” of the two companies’ existing roaming relationship to include “bilateral roaming”.
Telkom entered a national roaming agreement with MTN four years ago, when it launched Telkom Mobile. That deal allows Telkom Mobile customers to roam on MTN’s 2G and 3G voice and data networks.
TechCentral first broke the news in November last year that the two companies were in sensitive discussions about a possible deal.
MTN and Telkom may be pursuing a deal, at least in part, because of Vodacom’s exclusive talks to acquire Neotel, which was licensed in the mid-2000s to take on Telkom.
Neotel has an extensive fixed-line infrastructure and IT assets, including data centres, and, crucially, also has access to radio frequency spectrum that can be used for building next-generation 4G/LTE networks.
Vodacom and MTN both need access to new spectrum as they are being forced to redeploy their existing but already-stretched spectrum assets for 4G.
Telkom has access to a valuable chunk of spectrum — in the 2,3GHz band — which is well suited to building 4G/LTE infrastructure.
Telkom Mobile, formerly known as 8ta, was launched in 2010 after Telkom disposed of its 50% stake in Vodacom to shareholders and to the UK’s Vodafone.
As the country’s fourth mobile entrant, however, Telkom Mobile has struggled to compete and is probably still years from turning a profit. — (c) 2014 NewsCentral Media