Telkom SA "Planning Major Africa Transaction" Says Minister

South African communications minister Roy Padayachie has said that Telkom South Africa is ‘considering a major transaction in Africa’, Bloomberg Business Week reports.

Speaking at the company’s annual shareholders’ meeting in Johannesburg, Padayachie commented: ‘The board is busy with a major deal. Telkom will make an announcement soon. You have to be patient, Telkom will make the announcement when the time is right, but the board is busy with a deal’.

The minister was responding to questions regarding whether Telkom intended to make a new acquisition in Africa after selling its ill-fated investment in Nigeria’s Multilinks. Telkom bought its initial 75% stake in Multilinks for USD280 million in May 2007 and purchased the remaining 25% in January 2009 for USD130 million.

However, the telco cut its losses in June 2011 when it disposed of the loss-making unit for just USD10 million, to an affiliate of Helios Towers Nigeria (HTN).

Speaking at the meeting, Telkom chairman Lazarus Zim cautioned that the company needed to build a sustainable business in Africa, saying: ‘There were expensive and important lessons that we learnt in Nigeria’.

However, company spokesman Pynee Chetty distanced Telkom from the acquisition speculation, saying that the company has ‘not identified attractive acquisition targets in Africa at this juncture’ and that the group’s focus ‘is currently to improve the performance of existing businesses’.

Starcomms In Talks To Buy Multilinks

Nigerian CDMA operator Starcomms is reportedly negotiating a deal to acquire rival Multilinks, the local unit of Telkom SA, according to Nigerian newspaper THISDAY. 

Despite Telkom’s board having rejected a proposal by former CEO, Reuben September, to merge its Nigerian business with Starcomms back in January 2010, the pair are currently said to be negotiating a price for Multilinks, which was put up for sale in November 2010.

Since then, Multilinks was reported to have attracted interest from Etisalat Nigeria, but this was later denied by the UAE-owned company’s CEO Steve Evans. 

Telkom acquired a 75% stake in Multilinks on 1 May 2007 for USD280 million, and purchased the 25% it did not already own from Kenston Investments in January 2009 for USD130 million.

However, Telkom has failed to turn around the fortunes of the ailing company, which has struggled to survive in Nigeria’s fiercely competitive market, and wrote down the value of Multilinks by ZAR5.2 billion (USD751 million) in the financial year ended 31 March 2010. Telkom CEO Jeffrey Hedberg has estimated the ‘exit cost’ at anywhere between USD100 million and USD180 million.

MNP To Begin In Nigeria During H2

Nigeria's tele­coms regulator, Nigerian Com- munications Com- mission (NCC) has confirmed that the delayed Mobile Number Portability will be introduced in the second-half of this year, confirming earlier statements about the issue.

Mr. Stephen Bello, the acting vice-chairman of the Commission, told IT News Africa that  it had become necessary to introduce MNP because of the high telecom subscriber base in the country.

Mr. Earnest Ndukwe, former CEO of NCC, had set May 2009 as the date for the announcement of a timetable for MNP takeoff. On the mode of implementation, he said that the NCC would engage the services of an independent company to oversee the process. He also revealed that the local operators were on board and ready.

Earlier this year, the NCC retained the services of KPMG Consultancy Services as consultants for the development of Regulatory and Technical Framework for implementation of number portability in Nigeria.

According to figures from the Mobile World analysts, the country ended last year with 73 million mobile subscribers, representing a population penetration level of 50%. The market shares of the operators are: MTN Nigeria (42.2%), Glo Mobile (22.5%), Zain (20.2%), Etisalat Nigeria (4.7%), Visafone (3.7%), Multi-Links Telecommunications (2.7%), Starcomms (2.3%) and Reliance Telecommunications (1.7%)

Court Reinstates 3G Licencing In Nigeria

A Federal High Court in Abuja has voided the cancellation of the licensing of WiMAX spectrum in the 2.3GHz frequency band by Minister of Information and Communications, Dora Akunyili, in May 2009. The cancellation was reversed on the grounds that Akunyili's decision was in excess of her powers, making such action null and void. The court also ordered the Nigerian Communications Commission (NCC) to immediately release a licence to Mobitel, which emerged as one of the three winners for the four slots in the 2.3GHz band, after each paid the required NGN1.368 billion (USD9.33 million).

Akunyili issued a directive for the cancellation of the licensing round in May 2009, after the process led to a number of complaints from operators faulting the NCC on how it was conducted, especially the one-week timeframe given to pay the necessary fees. The other two winners of the licensing round were Spectranet and fixed-wireless operator Multilinks, although only Mobitel filed a complaint with the Federal High Court in August 2009, stating that as it fulfilled all the conditions for the acquisition of a licence, it should have received the concession.

Nigerian Mobile Market in Full Throttle

The Nigerian mobile market’s bullish growth showed no signs of abating in Q4 08. Quarterly net additions of 7.15m took the total number of customers over 60m, with a year-end figure of 62.99m, while the annual gain stood at 22.59m. By comparison, Q4 07 saw an increase of 3.39m and the 2007 boost was 11.92m. Meanwhile, the latest figures from Nigerian regulator the NCC show that at the end of January the total had risen to 64.16m.

There are now four mobile CDMA networks operating in Nigeria, and they contributed significantly to the quarterly gain. On aggregate, they added 1.93m customers in Q4, only just behind the record gain of 2.01m recorded in the previous quarter. This took the total mobile CDMA customer base over 6m with an end-2008 total of 6.05m, although the NCC’s figures show that there was a net loss in January which took the base back down to 5.87m. In terms of individual operators’ performances in Q4 08, Visafone overtook Multi-Links during the quarter with an excellent figure of 0.98m net additions. It finished on 2.21m compared to 1.99m for Multi-Links, which added 0.51m in the quarter. Meanwhile, Starcomms added 0.36m to break the 1m barrier, finishing on 1.16m, and Reliance reached 0.70m in its second quarter of operation.

Of course, the CDMA market remains a relatively minor part of the total, with less than 10% of Nigerian mobile customers at the end of 2008. The market leader is MTN, which recorded a gain of 2.91m – a Nigerian record. It finished on 23.08m, almost 6m ahead of nearest rival Celtel which ended the year with 17.20m customers. Having seized second place from Glo Mobile in Q3 08, Celtel consolidated its lead in Q4, adding 1.29m customers compared to 0.63m for Glo, which finished the year on just over 16m. The two remaining networks in Nigeria are government-owned Nitel, which had 0.26m customers, and the new Etisalat/Mubadala-owned entrant, which managed to gain almost 0.4m customers in its first quarter of service.

On a proportionate basis, the total market grew by 55.9% in 2008, up from 41.9% in 2007. Amongst the top three operators, Celtel led the way with 55.0% growth, ahead of MTN (39.8%) and Glo (30.9%).

Telkom SA takes Full Control of Multi-Links

South Africa's biggest fixed line operator Telkom has taken full control of Nigerian phone network Multi-Links buy acquiring the remaining 25% stake that it did not own. Telkom paid $130m to complete its ownership.

Telkom acquired the initial 75% in May 2007 at $280m. The increase in the proportionate purchase price is attributed largely to increased subscriber base over the twelve months to September 2008.
There has also been an increase in network capacity. The subscriber base swelled from 262,000 in September 2007 to over 1.7 million a year later.

The purchase price was arrived at after an independent expert was hired to asses the value.

Multi-Links operates a fixed wireless network on the CDMA platform in Nigerian cities, with a license it acquired in 2006 to offer voice, Internet and data services.

The acquisition is in line with Telkom's plans of expanding into the African market, a move that it hopes will improve upon its stagnated revenue base.