Telkom says talks with MTN, Vodafone terminated

Feel a bit sorry for Vodacom ... they now don't get to free themselves from Telkom. My personal feeling is that Telkom is like a chain around their neck, the incumbent's poor public image is something that will drain just about any company, especially one as image conscious as Vodacom.
 
utterly predictable

sorry Cara but my feeling is Voda deserve telkom as a pea deserves a pod
 
What a beautiful sight to see the Telkom share price crash.
 
Wyzak said:
What a beautiful sight to see the Telkom share price crash.
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A sight for sore eyes :D

Tom Nadeau spoke of this phenomenon on his website OS/2 Headquarters, although the company in question then was Microsoft, and not Telkom.

But the same principle applies.


Linky.

The law of entropy will apply in this case.
 
In the short term it is bad news. But Vodafone still maintains it want's to raise its stake in Vodacom so that is still going to be something that they will look at. The sale of Telkom's share in Vodacom could still continue while Telkom looks at what to do with its fixed line business.
 
IMO, Telkom did not know what to do with all the cash it would have generated by selling its stake in Vodacom (R70bn-R80bn). And in the telecoms field, the only real alternative would have been MTN. My suggestion to Telkom is (if I may make it on this forum :)):

  • Get rid off your stake in Vodacom. It may be cash generative, but it will hurt your own growth and Vodacom's growth if the partnership were to continue given the changing telecoms environment in SA
  • Get rid off the stake in a piecemeal fashion, maybe over a 3-5 year period, not all in one. It is simply to avoid Telkom becoming a takeover target for some private equity company wanting to get their hands on all that cash.
  • The conduit for this is that Vodacom be listed on the JSE and Telkom own the majority of the listed shares. Their share in Vodacom would then simply be an investment generating a return, not a strategic investment. It will also allow them to sell these shares when they need the cash for another acquisition, huge investment, or other such things.
  • For example, Telkom could sell just enough of Vodacom for it to buy another telco in SA or one of our neighbours. Personally, I like the idea of them buying Cell C - it will give Telkom a mobile footprint and give CellC a lot of cash to grow their local (and possibly African) business.
  • Another part of their stake in Vodacom could be sold to buy back govt's share in Telkom. It would provide a big income to govt, likely to foot the bill for Infraco's undersea cables and further national expansion. It will also allow govt to get out of Telkom without too much loss of market value of their investment.
The ideal picture is that SA has 3-4 competitive telecoms providers: MTN, Vodacom, TelkomCellC and Neotel, though the latter will be smallest for some time. Given the new ECA, they must be allowed to compete in all areas of telecommunication: fixed, wireless, mobile, international connectivity, etc.
 
Noooooo!!!! Now I cant get Vodacom shares at BEE prices and my MTN shares was supposed to grow when MTN bought Telkom!!!

Crap!!
 
JK8 said:
Noooooo!!!! Now I cant get Vodacom shares at BEE prices and my MTN shares was supposed to grow when MTN bought Telkom!!!

Crap!!
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I disagree. MTN's share price would have been under pressure if the deal did go through. Telkom is damaged goods (for reasons why, have a look at lots of threads on this forum). MTN would have been under pressure to deliver where Telkom could not (i.e. in the fixed line arena) and they might have been trounced by Neotel in the short to medium term.

Look at the MTN share price now. Clearly, the market likes the idea that MTN did not get Telkom's fixed line assets. Now MTN can focus on their wireless offerings and Northern African interests.

Remember: Telkom needed MTN more than MTN needed Telkom.
 
ripclaw said:
I disagree. MTN's share price would have been under pressure if the deal did go through. Telkom is damaged goods (for reasons why, have a look at lots of threads on this forum). MTN would have been under pressure to deliver where Telkom could not (i.e. in the fixed line arena) and they might have been trounced by Neotel in the short to medium term.

Look at the MTN share price now. Clearly, the market likes the idea that MTN did not get Telkom's fixed line assets. Now MTN can focus on their wireless offerings and Northern African interests.

Remember: Telkom needed MTN more than MTN needed Telkom.
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Mmmm good point.... MTN still going up...:)
I wonder if this wil effect Vodas share scheme... Will it?
 
JK8 said:

Mmmm good point.... MTN still going up...:)
I wonder if this wil effect Vodas share scheme... Will it?
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Until Vodafone can get a majority stake in Vodacom, there will be no share scheme. Watch for lots (and I do mean LOTS) of behind-the-scenes action between Telkom and Vodafone as Vodafone try to negotiate a deal to get at least 10% of Telkom's Vodacom stake.

If push comes to shove, watch for Vodafone to start accumulating Telkom shares from the open market (in stealth mode, of course). Their reasoning might be that if they own 5% of Telkom's shares, then they own 2.5% of Telkom's stake in Vodacom. But that is a last resort. Watch for Telkom to hold out insanely long for the best deal possible for their stake. And also watch the rest of their world fall apart as they focus on this one issue, instead of delivering and competing with Neotel. There's a storm coming, and Telkom is not going to be spared if they continue to look the wrong way...
 
Cara said:
Feel a bit sorry for Vodacom ... they now don't get to free themselves from Telkom. My personal feeling is that Telkom is like a chain around their neck, the incumbent's poor public image is something that will drain just about any company, especially one as image conscious as Vodacom.
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I agree with you, no one deserves the humiliation of being shackled to a Telkodemonopolies pole :D.

IMO it is bad news for consumers in the sense that the sale of Telkodemonopolies' 50% of Vodacom has been postponed, the reason I say postponed, is that there is going to be an immense amount of pressure behind the scenes on Telkodemonopolies, to convert its 50% of Vodacom into dividends - from the "certain quarters" guavamentalists.

CellC will probably become a takeover target for Telkodemonopolies - the beast doesn't have to spend much to buy CellC, and CellC will gain a WiMax partner to leapfrog ahead of MTN that currently doesn't have a partner with WiMax spectrum.
 
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