Telkom’s big copper plans: more details

Telkom plans to spin off its copper network into a separate entity, and part of that plan includes leasing the network from that entity. Telkom will also have the option to buy back the network when the lease agreement terminates.

This latest information comes from an industry source familiar with the plan, and follows news that Telkom is looking at spinning off its copper infrastructure into a separate legal entity known as a Special Purpose Vehicle (SPV).

According to the source, Telkom is looking at financing the SPV with debt, but it isn’t clear at this stage what the exact composition of the entity is going to be.

A source previously told MyBroadband that the plan excludes related infrastructure such as fibre and ducting, and that Telkom could be making an announcement on its plans to spin off its copper network as early as next month (August 2013).

Pressure mounting to unbundle, separate

In August 2012 the National Planning Commission suggested the possibility of a “structural separation of the vertically integrated incumbent backbone operator” in its National Development Plan.

Telkom and the Competition Commission recently reached a settlement to resolve complaints over anti-competitive abuses lodged between 2005 and 2007, which includes the functional separation between Telkom’s retail and wholesale divisions.

This settlement is subject to confirmation by the Competition Tribunal and Telkom and the Competition Commission are scheduled to appear before the tribunal on 17 July 2013.

The Independent Communications Authority of South Africa has also announced its intentions to finalise South Africa’s local loop unbundling regulations by 4 March 2014.

These regulations are expected to impact the way in which Telkom allows competitors to access its last-mile copper network.

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Telkom’s big copper plans: more details