Pressure to upgrade fixed lines
The news that Telkom has terminated negotiations with MTN for the sale of its fixed-line network and simultaneously terminated negotiations with Vodaphone to sell its 50% stake in Vodacom is expected be positive news for Kabel-X Patented Technology, since it clears the way forward, and opens up multiple opportunities for the upgrade of old copper communication lines.
This is according to Richard Baker, MD of Kabel-X PLC, who believes that the stock price fall for Telkom and counter rise for MTN suggests this negotiation will not resurrect itself in the near future.
Kabel-X recently formed Kabel-X Africa to establish a presence in SA as its launch pad for the entire African region.
According to Baker, Telkom may now be under increased pressure to act quickly to upgrade its fixed-line network. "Previously Telkom was able to point to the ongoing negotiations and investors and customers were possibly being patient in the expectation that things would change once the uncertainty had been removed with regard to the ownership of the fixed line network. That uncertainty has now passed so we can expect investors and customers to be renewing pressure upon Telkom to increase network capacity and solve the problems of copper theft."
"The new Telkom CEO has now been appointed on a permanent basis, so we can expect a new phase of activity. This could bring an end to the previous ’wait and see what happens’ approach to network upgrades," he says.
"We can expect copper theft and loss of service to be high in the news during the coming months, as the previous uncertainty regarding the prospect of the MTN buy-out has now been removed."
Baker also believes that Vodaphone will be pressing for more capacity. "Now that the JV buy-out with Telkom has aborted, Vodaphone will want to know what its JV partner will be doing to solve the existing system under capacity."
In addition he adds that MTN will need to strengthen its access to a fixed-line network for its mobile business. The pressure for increased communication bandwidth is increasing every month.
"Previously MTN was possibly reluctant to commit massive resources to securing its own fixed-line network as it may have been able to buy Telkom’s instead. That option is now off the table. It may need to act quickly to remove nervousness that it has lost time and momentum through the now aborted negotiations. We hope that it will be looking at existing legacy network owners and thinking about ways to upgrade these networks to fibre," says Baker.
"Owners of existing legacy buried networks will have a huge opportunity to upgrade, sell or lease access to their infrastructure if they upgrade to fibre. Tshwane, Eskom, Transtel, and regional municipalities are believed to have hundreds of thousands of kilometres of dead buried copper cable crossing the whole country. These redundant networks could now become the opportunity to provide an alternative fibre network to MTN and the other mobile operators and assorted cable companies. It also offers the chance to create Virtual Private Networks for key major customers."
According to Baker this is good news for Kabel-X, whose technology replaces underground copper cables with fibre-optic cables without the need to excavate.
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