What was Telkom thinking?
That paraphrasing of Oscar Wilde nicely sums up the three way shenanigans between Telkom, Vodafone and MTN that ended yesterday, leaving everything in stalemate.
News that MTN will not buy any of Telkom’s fixed-line assets is no surprise. MTN was showing a remarkable but ill-conceived optimism that the competition authorities would permit a deal between two giants.
MTN certainly needs a fixed line backbone to help it carry more voice and data traffic. It is wisely building its own fibre optic network, and probably opened talks with Telkom to see if there was any value in taking over Telkom’s infrastructure.
But a deal never looked likely. News that MTN was laying its own cables for R1,3bn came after the talks began, with local MD Tim Lowry saying he was not waiting to see if anything materialised from the discussions to buy rather than build the infrastructure.
It’s safe to speculate that Telkom refused to sell only the choice parts of its network and tried to structure a job-lot deal. So MTN walked away. Smart move, MTN.
But the glaringly stupid part seems to have been making the deal with Vodafone dependent on the MTN deal. What was Telkom thinking? Selling its 50% stake in Vodacom to Vodafone, which already owns the other 50%, is sensible all round.
Telkom and Vodacom do not work well together, and Telkom would fare better with the freedom to pick which cellular operators to partner with on different projects. Vodacom is an unhappy offspring fought over by two parents with different ideas about its future.
Telkom probably will sell its stake to Vodafone in the future, but why let it fall apart now by inexplicably relating a sensible deal to a tenuous deal?
Stupid move, Telkom.
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