Telkom to piggyback on existing providers
Telkom plans to piggyback on an existing cellphone operator’s network as part of its fixed cellular services strategy, but Vodacom has already warned that it might be difficult to enter the cellular market.
Yesterday Telkom and Vodafone announced that they had signed the long-awaited transaction that would result in the UK-based cellular operator taking control of Vodacom.
"We don’t intend to be a fourth mobile phone operator in South Africa," said Reuben September, the chief executive of Telkom.
He said Telkom would build a selective geographical cellular network and was still pursuing a roaming agreement.
Telkom could enter into an agreement with an operator that had spare capacity on its network. According to analysts, this would offer great opportunity for returns.
But Pieter Uys, the chief executive of the Vodacom Group, said it would be too late for another traditional cellular operator to enter the market, as SIM card penetration was already 45 million.
He warned that although regulatory changes allowed operators to diversify their services, it would be difficult for Telkom to operate like MTN, Cell C or even Vodacom.
"Maybe one day we will discuss with Telkom to become our service provider," he said.
Vodafone would buy an additional 15 percent of Vodacom for R22.5 billion. The remaining 35 percent would be unbundled to Telkom’s shareholders when Vodacom listed on the JSE’s main board in the first half of next year.
The deal, supported by the government and the Public Investment Corporation, which together own 55 percent, will be finalised before June.
Morten Lundal, the chief executive of Vodafone Group’s central Europe and Africa regions, said that Vodafone had agreed with the government that the Vodacom identity would remain visible on the African continent.
"We have to find the best way to still get both brands [Vodafone and Vodacom] to work together and to the best of the consumer. We are yet to find exactly how to do that," said Lundal.
Vodafone will use Vodacom as an investment vehicle in sub-Saharan Africa.
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