Telkom copper network spin-off: who’s interested?

If Telkom were to spin its copper network off into a separate entity and try to raise funding partly from the private sector, at least two industry players have no interest in buying into it.

Vox Telecom executive head of strategy and innovation, Douglas Reed, and the chief technology officer of Internet Solutions, Prenesh Padayachee, both said that they wouldn’t be interested in a stake in Telkom’s copper network.

This follows information MyBroadband recently received indicating that Telkom is looking at selling off its copper network to a Special Purpose Vehicle (SPV), and then lease it back from the SPV. Telkom’s plan also includes the option to buy its copper back at the end of the lease period.

Telkom could be making an announcement about this as soon as a month from now (August 2013), a source has revealed.

Douglas Reed
Douglas Reed

Vox and IS not interested

Asked why they aren’t interested, Reed said this would be a long term infrastructure investment more suited to government investment.

“We think it is makes sense for the government to split out the wholesale division from Telkom (copper and fibre), nationalise it and merge it with [Broadband] Infraco and Sentech,” Reed said.

Padayachee felt that Telkom’s copper infrastructure was too old and said he would guess that the maintenance costs are fairly high.

“In addition, with technology changing at such a rapid pace, the need for copper wired infrastructure is rapidly declining,” Padayachee said. “Therefore, the return on the capital would be fairly risky.”

Prenesh Padayachee
Prenesh Padayachee

Vodacom, MTN, Mweb, and Cell C respond

Vodacom, MTN, and Mweb declined to comment, with Mweb’s Derek Hershaw saying that it’s pure speculation at this stage and that they haven’t given it any thought.

MTN also indicated that it did not wish to comment on the hypothetical scenario that Telkom would be open to funding from the telecoms industry for its SPV. “We do not comment on market rumours or speculation, so we cannot provide any comment,” MTN said. “We shall however continue our self provisioning efforts.”

Cell C said, “It’s an interesting proposal and we will keep an eye on it.”

Neotel mum

Neotel did not comment by the time of publication.

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Telkom copper network spin-off: who’s interested?