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    TechCentralTechCentral
    Home»News»Telkom up on mobile rumours

    Telkom up on mobile rumours

    News By Duncan McLeod21 January 2014
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    Cell-tower-640

    Telkom’s share price climbed marginally on the JSE on Tuesday after a report overnight suggested it may be in discussions with an investment group from Southeast Asia that may be prepared to invest up to US$3bn into the operator’s struggling mobile division.

    According to a report on a website called Business Tech, the investment group — which, curiously, the website fails to name — wants to set up factories to build tower infrastructure in South Africa. Telkom’s share price was about 1% higher in early morning trading on Tuesday. It was trading up by about 2% at lunchtime.

    The website, quoting a “document”, claims that the Southeast Asian group wants to buy 1 600 Telkom Mobile towers and build an additional 8 400 base stations to allow it to compete more effectively with incumbents MTN and Vodacom, which together control more than 90% of the market as measured by revenue.

    The website does not say who the investors in the grouping are or why they’d be prepared to invest in a struggling fourth mobile entrant that has yet to turn Ebitda positive. (Ebitda is earnings before interest, tax, depreciation and amortisation.)

    TechCentral first revealed in November last year that Telkom’s plan to “de-risk” its loss-making mobile business could lead to a transaction with rival MTN. The two operators were in sensitive discussions about a possible deal, two separate and well-placed sources said at the time.

    Ironically, MTN considered an acquisition of Telkom in 2007, but backed away. More recently, Telkom entered into a national roaming agreement with MTN, allowing it to use the latter’s infrastructure in areas where it does not have coverage.

    The two parties could be pursuing a deal, at least in part, because of Vodacom’s exclusive talks to acquire Neotel, which has extensive fixed-line infrastructure and IT assets, including data centres. Crucially, Neotel has access to radio frequency spectrum that can be used to build 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.

    At Telkom’s interim results presentation in Pretoria in November, group CEO Sipho Maseko said several times that the operator was “in discussions with some parties with regards some possible options”. He said that whatever deal was reached, it should reduce Telkom Mobile’s “capital appetite”.

    Reports have linked Cell C to a possible deal with Telkom, but TechCentral understands there is no basis to this repeated speculation and that no formal discussions have taken place between the two companies.  — (c) 2014 NewsCentral Media

    MTN Neotel Sipho Maseko Telkom Telkom Mobile Vodacom
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