According to Telkom, the HoA explains that the parties intend to conclude network management services and reciprocal roaming agreements.
Under these agreements MTN will take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network (RAN).
Each party will be able to roam on either party’s network, Telkom said.
“In keeping with our plans to de-risk our mobile business we have explored various options in recent months,” said Telkom CEO Sipho Maseko. “I am pleased that we are at this stage of engagement with MTN.”
Maseko said that the conclusion of an agreement will allow them to expand their mobile coverage, and to reduce their operating costs and capital expenditure significantly.
“We will be able to provide our customers with effective access to the latest state-of-the-art national voice, 2G, 3G and LTE networks without having to incur the significant capital expenditure ordinarily required to achieve such national coverage,” Maseko said.
Both Telkom and MTN will have access to increased voice and data capacity, improved voice quality, and faster data speed, Maseko said, at a lower cost than would have otherwise applied.
Telkom said that the proposed transaction will still let them maintain a mobile offering that supports a converged product set in the consumer and enterprise segments.
The deal will also still let Telkom define and manage its own mobile products and services and market itself under the Telkom brand.
The company’s channels and distribution network, client service infrastructure and billing channels will be unaffected by this agreement, Telkom said. It will continue to run these services as it currently does, Telkom added.
Telkom said it will maintain and evolve its mobile core network and systems and continue providing differentiated products and services to the market.
“This is not a mobile virtual network operator, Service Provider or Reseller relationship; it is a ground-breaking means to outsource the operation of our RAN for scale and efficiency, whilst retaining and enhancing our competitive differentiation and flexibility,” said Maseko.
“This agreement will allow us to increase competitiveness and improve our capabilities to compete at both wholesale and retail levels,” Maseko said.
Telkom said that the proposed transaction is subject to the conclusion by the parties of various binding commercial agreements to give effect to the proposed transaction.