Telkom mum after Uganda setback
Telkom has refused to confirm that its effort to expand into Uganda has been abortive, but the country’s New Vision newspaper says the shares that Telkom sought have been sold to a well connected rival bidder.
The news is a blow to Telkom’s determined but largely fruitless effort to grow revenue by expanding into countries where the telecoms markets are less satu rated than in SA, where profit from voice calls is dwindling.
Corporate communications executive Lulu Letlape said yesterday Telkom would make “no further comment on the matter”.
The deal would have seen Telkom buy out Ucom, a consortium that holds 51% of Uganda Telecom. Telkom would have gained control of Uganda’s main fixed-line operator and also over its subsidiary Mango, a cellular network operator.
Ucom is 60% owned by SA’s Telecel International and 40% held by Germany’s Detecon. Now it seems they have sold their shares to Libya Africa Portfolios (LAP), the investment arm of the Libyan government.
LAP already has several investments in Uganda’s construction and garment industries. Telecel International could not be reached for comment yesterday.
In February, New Vision reported that Telkom was in the final stages of buying into Ucom, with Uganda Telecom secretary Donald Nyakairu saying the two entities were at the “price negotiation stage” after due diligence by both sides.
At the same time, however, Uganda Telecom’s chief commercial officer, Hans Paulsen, said there was a sticking point over the price and that Telkom was not the only bidder.
Forecasting company Global Insight says Telkom was widely seen as the favourite but apparently pulled out of the process.
Telkom CEO Papi Molotsane has named Nigeria, Kenya, Botswana, Angola and the Democratic Republic of Congo as other countries where it would like to offer a package of voice, data, video and internet services to ensure sustainable growth.
One of its efforts to grow failed when negotiations collapsed for a stake in Portugal Telecom, which has operations in the Congo, Mozambique, Guinea Bissau, Kenya, Sao Tome, Cape Verde, Angola and Morocco.
A bid to buy 51% of Nigeria’s fixed-line operator Nitel fell through when Telkom became anxious about the quality of that business.
The deal with Ucon came far closer to success, with Telkom previously confirming it had followed a detailed process to ensure the Ugandan opportunity was a strategic fit, that all risk and resource requirements were understood, and that the potential returns exceeded its minimum requirements.
Last month Telkom finally managed to begin its expansion strategy by massively outbidding a rival to acquire internet service provider Africa Online.
The company operates in Côte d’Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda and Zimbabwe, and has a joint venture in Kenya and Zambia with Verizon.
Telkom paid £10,32m, or R142,6m — almost double the bid made by Africa Telecoms Company of Kenya. The price included a peace settlement of £600000 towards costs its rival incurred when the battle turned nasty.
The deal for LAP to take control of Uganda Telecom could be challenging for MTN, which operates a cellular network in Uganda. MTN Uganda and Ugan da Telecom are each licensed to offer fixed and mobile services, making them rivals on both fronts.
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