Telkom keen on DRC, Kenya
Speaking at the group’s results presentation in Midrand, Telkom CEO Sizwe Nxasana said as far as possible it hoped to expand into other markets in conjunction with its 50% mobile subsidiary Vodacom. But, it was not constrained from some markets, like Vodacom is due to its shareholders agreement. The other shareholders in Vodacom are Vodafone (35%) and Venfin (15%).
Nxasana said although markets like the Middle East could be interesting, it was foremostly focused on expanding into Africa and in October last year, had formed a division specifically to evaluate opportunities outside of SA. He said it would only look at markets that were large and offered big growth opportunities.
Telkom has, along with Vodacom, already expressed an interest in the controlling stake of Nigerian state-owned teleco Nitel. However, a short-list of potentially successful bidders has yet to be released. And, the status of the joint bid would seem unclear if Vodacom manages to enter Nigeria via the more established operator, V-Mobile instead of Nitel’s mobile arm M-Tel.
Last week, Vodacom announced that it had formed a consortium with Richard Branson’s Virgin to buy the controlling stake in V-Mobile. Analysts at the results presentation questioned why Vodacom had partnered with Virgin given its existing relationship with Vodafone. Vodacom CEO Alan Knott-Craig said it had made a bid for V-Mobile that was accepted by the board. But, it was subject to various conditions, which he said Vodacom didn’t think it could satisfy entirely. As a result, it had formed a consortium with Virgin, which it would control and Virgin would be a majority shareholder in, and had submitted a joint bid to add “breadth”.
The possibility of this bid going through was again frustrated by legalities last week, however, with the news that the international arbitration court hearing the Econet shareholders dispute did not have jurisdiction to decide on the matter and had passed it on to another court. Econet believes that it has the right to buy the controlling stake in V-Mobile.
Asked where this left the Vodacom / Virgin bid, Knott-Craig said Vodacom had no intention of “flouting” the decision of any court or legal process: “We would respect all court proceedings and rulings.”
Should Vodacom enter into a new market like Nigeria, this will clearly mean additional capital expenditure. Knott-Craig said although it would be a different scenario if it went into any market via an already established operator, as opposed to starting a greenfields operation, as it has done in Mozambique. But, if it did invest in Nigeria via V-Mobile, he estimated Vodacom could spend between R6-bn and R9-bn in capex in that country over the next few years.
Knott-Craig says he doesn’t think the Nigerian market has nearly been exploited and as a result, is still a very attractive market for new entrants given the population size. “It has other risks, but customers is not one of those.”
Original Article: http://www.moneyweb.co.za/news/tech_stocks/447221.htm
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