Telkom Mobile draws R30 billion deal

Telkom’s mobile business and infrastructure is attracting interest from companies a far afield as Malaysia.

By - January 21, 2014
Telkom generic

Telkom’s mobile business and infrastructure is attracting interest from companies a far afield as Malaysia.

One of the proposals would see an investment of up to $3 billion (R32 billion) made into South Africa, including the setting up of a factories for the building of tower infrastructure, thereby also fostering job creation.

A document seen by BusinessTech reveals how an investment company from South East Asia aims to buy up to 1,600 Telkom towers and then build an additional 8,400 towers, which it says is necessary to make the operator competitive against the likes of MTN, and Vodacom.

In November, Sipho Maseko, Group CEO at Telkom, admitted that the Telkom Mobile business is going through “a very difficult time”, and is in discussions with parties over future operations.

Bloomberg recently reported that MTN Group is believed to be in discussion with Telkom regarding the sharing of infrastructure.

Cell C has also been linked to a merger with Telkom. Jose Dos Santos, Cell C chief commercial officer, and acting CEO told BusinessTech at the end of last year: “Market consolidation is inevitable. Consolidation will help smaller operators build scale to compete more effectively with players that have significant market power.”

While further details pertaining to a potential investment from Malaysia remain confidential, the firm said that it hopes to remove non-core assets from Telkom SA, which in turn, would enable it to focus on its core business.

“At the same time, the partnership could also free up cash flows for other capex requirements as well as provide growth potential for the mobile business and also empower and increase potential job creations,” the document said.

A spokesperson for the Malaysian group said that such a proposal would benefit the country due to the foreign direct investment it would involve.

Telkom said in a statement: “Telkom continues to review its operations in an effort to stabilise the business and unlock its value. The company is therefore engaging with various parties to consider best options for the business, however Telkom is not in a position to disclose any further details at this stage. We will inform the market and all our stakeholders of the outcome of the discussions at the appropriate time. ”

This article was first published on BusinessTech.

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