The Telkom board will consider bids for its fixed-line phone business and its 50% stake in cellphone giant Vodacom when it gathers for its annual meeting next month. <\/p>\n
Business Times has established that Telkom, which is partly state-owned and has a market capitalisation of about R97-billion, has received two offers for its telecommunications assets.<\/p>\n
Cellphone group MTN — with a market cap of R184-billion, almost double that of Telkom — and a private consortium are making a play for Telkom’s fixed- line business and its stake in Vodacom. <\/p>\n
Both have already sent their offers to Telkom, but have been told to improve their bids and resubmit them for consideration at the coming board meeting.<\/p>\n
The private consortium is headed up by businessman Barend Hendricks, who was instrumental in facilitating the sale of Telkom shares to the controversial, politically connected Elephant empowerment group.<\/p>\n
Hendricks on Friday refused to comment on the deal, saying: “I am not in a position to comment on ongoing business transactions.”<\/p>\n
MTN CEO Phutuma Nhleko is known to be willing to take big bets to build his company. He would not comment on “market speculation”, but did not deny that the group had made a bid for the fixed-line operator.<\/p>\n
He said: “MTN will look at anything that improves the group’s ability to enter the corporate market. Especially around convergence, we will keep an open mind to opportunities that present themselves.” <\/p>\n
Convergence refers to the distribution of television and audio entertainment and Internet access, among other digital offerings, over wireless and fixed telecommunications networks.<\/p>\n
Renaissance Specialist Fund Managers portfolio manager Khulekani Dlamini told Reuters this week that it made sense for MTN to consider buying Telkom.<\/p>\n
“If the strategy is to offer converged solutions to corporate clients, the price tag of Telkom, excluding Vodacom, is less of a barrier to acquisition,” he said.<\/p>\n
MTN could purchase Telkom for access to its fixed-line market should Telkom sell its 50% stake in Vodacom to UK-based Vodafone. <\/p>\n
Business Times has learnt that Telkom is close to concluding the sale of its Vodacom stake to its current partner Vodafone, which has pre-emptive rights to buy the half-share.<\/p>\n
Telkom could pocket more than R70-billion from the sale of its Vodacom stake.<\/p>\n
Vodacom wants Telkom to sell its stake to Vodafone, and has proved a reluctant partner in Telkom’s strategy of offering a joint range of fixed, mobile and data services.<\/p>\n
A source close to the deal said: “Things are moving quite quickly. They will definitely sell their stake in Vodacom soon, before they decide on the sale of their fixed-line assets.”<\/p>\n
Telkom spokeswoman Lulu Letlape confirmed the company was reviewing its mobile strategy. “This review is not complete and Telkom will provide more information to the market when we are ready to do so.”<\/p>\n
MTN confirmed on Friday that it was aggressively growing its own fixed-line capacity. In June, the mobile operator said it was considering building its own fixed-line network to trim the levies it has to pay Telkom to use its backbone and to meet demand for Internet access.<\/p>\n
It is already testing a fibre- optic line as a pilot project between Rosebank and Sandton, in Johannesburg, and the group is expected to make a major announcement this week on other fixed-line projects.<\/p>\n
MTN Africa is possibly looking at building a fibre-optic line that will run through Africa from SA. <\/p>\n
If Telkom sells off its stake in Vodacom and its fixed-line network, the company would become an empty shell, holding billions of rands in cash. <\/p>\n
Shareholders, including the government, would be the winners as they would be paid out massive amounts. <\/p>\n
In addition to pocketing the cash, analysts say government will boast that selling Telkom’s assets proves how pro-active it is in liberalising the market.<\/p>\n
The way would be opened for government’s new broadband baby Infraco, second network operator Neotel and Sentech to drive the government’s telecoms agenda.<\/p>\n