Telkom at the crossroads
This year is set to be crunch time for the fixed-line operator, as it is faced with some critical decisions that will determine its future in the highly competitive telecoms market.
Recent news that Oger Telecom, which is owned by Lebanese-controlled Saudi Oger, has made an offer to Telkom did not surprise the market as the rumours of a possible tie-up with Oger through its 60 percent ownership of Cell C had already started doing the rounds last year.
Although this move could pave a way for Vodafone to increase its stake in Vodacom, some analysts are sceptical about the feasibility of a partnership between Cell C and Telkom.
Dobek Pater of African Analysis questioned whether Cell C would be any more successful in the local market if Saudi Oger owned both Cell C and part of Telkom.
In addition, Telkom does not have the skills to pump into Cell C's cellular operation to make it more successful.
It is difficult to see how the two operators would co-operate to sell fixed-line and cellular services in the market, when they have little or no knowledge of each other's operations.
However, Oger Telecom could bring in its own expertise, since it has both fixed-line and cellular operations in Turkey.
Moreover, if Telkom and Cell C's partnership does go ahead, Telkom will be partnering with a cellular operator generating no profit at present.
It will have to improve Cell C's performance – probably at high cost.
Another snag for Telkom is that Cell C does not have its own high-speed internet and 3G network yet. It would have to expedite the activation of its 3G network to be more competitive against MTN and Vodacom, particularly on high-speed data and multimedia services.
This was probably not a viable scenario for Telkom, said Pater.
Whatever Telkom decides on this year, it still remains an attractive asset to most companies on an acquisition prowl.
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