In shedding Vodacom, Telkom plans network
TELKOM is preparing for the expected shedding of its 50% stake in Vodacom by crafting plans to offer mobile services of its own. By the end of the month the fixed line phone company will be rolling out a wireless network promising high speed internet access and the ability to make voice calls using mobile phones. Customers will be offered nongeographic phone numbers, which basically means it will begin to compete with the cellular players.
Telkom needs to devise a new mobile strategy because its 50% ownership of Vodacom has never translated into a successful working partnership.
Now it is negotiating to sell 12,5% to Vodacom’s other owner, the UK’s Vodafone, for R18,75bn, and to unbundle the remaining stake to Telkom shareholders. The flaw in that plan is that it leaves Telkom without a mobile partner when clients are demanding a combination of fixed and mobile services.
That gap will partly be filled by building a new wireless network using wideband code division multiple access (W-CDMA) technology. However, one source believes the change of power sweeping through the African National Congress will scupper Telkom’s plan to sell the Vodacom shares to Vodafone.
The government owns 38% of Telkom, and would have to grant permission for the deal. That is unlikely to happen, he believes, as the state would struggle to justify selling the control of such a valuable asset to a foreign entity.
Whether the government agrees to sell Vodacom or not, the political shake down could stall any decisions for several more weeks, the source says. But he expects the deal to be canned completely.
“I don’t see Telkom coming up with something magical,” he said. “Unless Telkom can say ‘this is our new mobile strategy’, I see no logical explanation to sell Vodacom. It doesn’t make sense for SA to sell that asset to a UK company.”
The counter-argument is that Telkom and Vodacom have never worked well together. Telkom CEO Reuben September recently said the dual ownership was bedevilling all three parties, and was not helping Telkom to grow its business.
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