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’.

WACS Arrives Near Cape Town

Submarine communications cable the West Africa Cable System (WACS) has landed in Yzerfontein, near Cape Town. The 14,000km cable, which is expected to dock at 14 different landing points along the Western coast of Africa, before linking to the Canary Islands, Portugal and the UK, is set to commence commercial service in 1Q12. The total capacity of the system is 5.12Tbps, and at least 500Gbps will be lit at launch.

Investors in the WACS cable include South African telcos MTN, Vodacom, Telkom South Africa, Broadband Infraco and Neotel.


Angus Hay, head of strategic business development at Neotel, commented: ‘This is the dawn of a new era in the South African telecommunications industry. 


Since the launch of SEACOM and later EASSy, international bandwidth to South Africa has increased. The landing of WACS sets Neotel ahead of its competitors, as it is the only telecommunications operator that has direct access to all five undersea cables landing in South Africa: WACS, SEACOM, EASSy, SAT-3 and SAFE. 


For Neotel this means that our customers are highly unlikely to experience downtime since the traffic can be moved from one cable to another in case of any cable failure. The level of redundancy, reliability and security will now increase’.

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.

TelOne Gets GSM Licence

Zimbabwe’s Postal & Telecommunications Regulatory Authority (POTRAZ) has issued state-owned fixed line telco TelOne with the country’s fourth GSM mobile service provider licence, according to a report on AllAfrica.com.

POTRAZ deputy director-general Alfred Marisa revealed that the watchdog granted TelOne the concession late last year in response to a request for GSM frequencies from the telco when its 20-year telecoms licence was due to expire. The regulator added that it had not given TelOne fixed timelines to roll out mobile services, in light of its financially challenged status.

The state already owns a GSM operator, NetOne, the smallest of the country's three cellcos behind Econet and Telecel. NetOne is currently attempting to boost its flagging fortunes under a state-blessed strategy to find a foreign private sector investment partner, with South Africa's MTN the leading candidate. TelOne has also previously been reported to be in partnership talks with prospective foreign partners, chiefly Telkom South Africa, according to TeleGeography's GlobalComms Database, and the addition of a GSM licence could increase the incumbent's attractiveness as an investment.n the matter.

Telecom Namibia Ready to Join WACS

Telecom Namibia says it is ‘ready’ to connect the country to the West African Cable System (WACS), a consortium high speed submarine system linking Africa to Europe, which it hopes will lead to higher-bandwidth, cheaper data and voice services for all end-users. The USD600 million fibre-optic cable has reached the shores of Namibia, whilst Telecom has already deployed infrastructure to link its landing station at Swakopmund to its domestic network and expects that commercial services could be launched by the second quarter of this year, reports local newspaper New Era. The project will give Namibia its first direct access to global submarine cable networks.

The WACS consortium consists of twelve companies: Angola Cables, Broadband Infraco, Cable & Wireless, Congo Telecom, MTN, Office Congolais des Postes et Telecommunications, Portugal Telecom/Cabo Verde Telecom, Tata Communications/Neotel, Telecom Namibia, Telkom SA, Togo Telecom and Vodacom. The main contractor is Alcatel-Lucent.

Telkom SA Prepares to Spread Into the Rest of Africa

SOUTH African Telecommunications operator, Telkom, has secured operating licences in east, south and west Africa, the company revealed on Monday in an interview.

Responding to questions, Telkom spokesman Pynee Chetty said the telecoms giant had secured operating licences in Nigeria, Zimbabwe, Tanzania, Ghana, Kenya, Uganda, Zambia, Swaziland and Namibia.
“Telkom’s ambition is to become a significant Information Communication Technology (ICT) player in Sub-Saharan Africa, focusing on the enterprise market.

“Apart from the satellite-based (SAT3) cable system, Telkom has invested in the new WACS, EASSy and SAFE submarine cables systems to further strengthen its position with regards to connectivity on the African continent,” said Chetty.

He said the operations in those countries consisted of consumer and enterprise solutions within the respective markets.

Chetty said Telkom would continue to service all these markets and acquire capabilities, through partnerships or own assets, to meet the demands of the local African enterprise and global multinational customers.
“The company continues to investigate opportunities in Africa and endeavours to expand into countries where customer demand warrants such actions.
“As far as the specific products and services are concerned, it is logical to utilise existing skills and capabilities acquired in the domestic market as far as possible when entering new markets,” said Chetty.

Telkom Resumes Talks With AT&T Over Partnership

South African telco Telkom has announced that it is looking to restart talks with US-based AT&T about its long-mooted African partnership, which has so far brought very little new business to South Africa.

In April 2009 Telkom signed a Memorandum of Understanding (MoU) with AT&T that would allow the US firm's African clients to use Telkom's internet network when expanding or conducting business on the continent.

In time, Telkom's network was due to be linked to AT&T's global network, boosting its business prospects further. It is thought that progress has been stunted by issues related to pricing and after-sales support.

Acting CEO Jeffrey Hedberg told Reuters: ‘I am going to re-ignite discussions with AT&T. The partnership has not progressed to an extent we would like to date.’ Hedberg also confirmed that Telkom’s ZAR6 billion (USD800 million) plan to enter South Africa's mobile phone market by the end of 2010 is still on course, adding: ‘We are working very hard and remain committed to launch our mobile before year-end’.

MWEB to Finally Launch New ADSL Product

South African ISP MWEB has announced that its long-rumoured 10Mbps uncapped ADSL products will finally be available in September.

The company has explained that the delay is down to incumbent PSTN operator Telkom’s hesitant upgrades of MWEB’s IPC platform – the bandwidth that connects MWEB customers to Telkom’s last-mile network.

Although 4Mbps ADSL subscribers in certain areas have already been upgraded to 10Mbps, users in cities such as Pretoria, Johannesburg, Cape Town, Durban and Port Elizabeth are only reporting speeds in the region of 6Mbps. As things currently stand, MWEB has to make use of additional capacity on its SAIX network in order to meet its total ADSL demand. It is reported that the additional SAIX capacity costs MWEB ‘a great deal of money’.

A spokesperson for MWEB commented: ‘Firstly, we want to satisfy ourselves that Telkom has addressed some of the congestion problems on its own network, to cater for this additional demand. Then, we are waiting for Telkom to finalise an upgrade to our own IPC platform.

These upgrades were put on hold during the World Cup, but work has now resumed and will hopefully be completed within the next three to four weeks. Until we have this additional capacity in place we are not comfortable of being able to offer a product that lives up to our own high standards, and meets your expectations in terms of performance and reliability.’

Telkom SA to End9-Year Case With USD 80 Million Settlement

Telkom, South Africa's largest fixed line operator by subscribers, has announced that it will pay USD80 million to settle a nine-year old legal dispute with US firm Telcordia Technologies.

The 2001 warngle involves the supply and installation of a customer management system, which Telkom insisted did not match up to specifications – claiming breach of contract.

In 2000 Telkom terminated its agreement with Telcordia, alleging that the US company had not provided the product to the agreed specifications.

In 2001 Telcordia set in motion an arbitration process with the International Chamber of Commerce. In 2005 the Supreme Court of Appeal (SCA) ruled in favour of Telcordia, but the matter was subsequently taken to further arbitration.

A Telkom spokesman commented: ‘This settlement follows on from lengthy arbitration proceedings, during the course of which two partial awards were made by the arbitrator’. Previous indications suggested that the telco could have been liable for a fine of as much as USD1.5 billion.

Telkom Annual Results Reveals Fall In Profits

Telkom South Africa said fiscal 2010 full year profit fell because of increased competition from mobile operators and lower price increases. Revenue for the twelve months ended 31 March 2010 rose 0.7% to ZAR37.029 billion (USD4.887 billion), while EBITDA fell 15.2% from ZAR11.574 billion to ZAR9.809 billion.

The earnings measure excludes a profit from the sale of its 50% stake in Vodacom Group and ZAR5.2 billion (USD698 million) write-down on its Nigerian unit. Low tariff increases, greater competition in its domestic market and Nigeria, coupled with high, ageing handset stocks and above-inflation wage increases, cut margins.

Voice traffic volumes fell 9.3%. Capital expenditure fell by 44.2% to ZAR5.4 billion during the year.

ICASA Releases Bids For Spectrum Bands

South Africa’s Independent Communications Authority of South Africa (ICASA) has released its ‘Document on Spectrum Licensing Framework Regulations and Invitation To Apply for 2.6GHz and 3.5GHz Bands’.

Under the new guidelines, bidding will start at ZAR750,000 (USD98,000). ICASA requires 2.6GHz licensees to achieve population coverage of 50% within two years of being granted spectrum.

Vodacom, MTN, Cell C, Neotel and Telkom are all reported to be keen to get their hands on the spectrum, which is suitable for the deployment of Long Term Evolution (LTE) technology.

MTN and Telkom Ink Roaming Deal

Incumbent operator Telkom South Africa and mobile operator MTN South Africa yesterday announced that they have reached agreement on nationwide roaming. At the same time, Telkom also announced plans to build 2,000 base stations over the next two years as part of its strategy to launch wireless operations. Telkom has suffered profit declines from its core business after selling its stake in mobile group Vodacom in 2009.

The company says it will invest ZAR6 billion (USD82 million) over the next five years to launch a new mobile business. Pinky Moholi, managing director of Telkom SA’s business unit said: ‘The agreement paves the way for Telkom to launch its mobile service later this year by offering its customers seamless access to a stable MTN SA network with a substantial national footprint, whilst continuing to roll out its own mobile base stations,’ quoted IT News Africa.

SA Delays Number Portability To Test Systems

The second and final stage of the introduction of fixed line number portability, which will allow individual Telkom customers to switch networks without losing their numbers, has been delayed by about five weeks. The first phase of fixed line number portability, also known as geographic number portability (GNP), kicked off in May 2009; the second, more important phase, which allows individual numbers to be ported, was meant to begin this week. But a well-placed industry source says implementation has been delayed until 26 April to accommodate final testing of IT systems, among other things.

The Number Portability Company, which already handles number porting for the mobile operators, will manage individual GNP on behalf of the operators. Vodacom, MTN and Cell C have agreed to dilute their shareholding in the company to allow Telkom and Neotel to become shareholders, too. It is understood the deal has already been agreed to by the mobile operators and is now awaiting signature by Telkom and Neotel before full implementation can begin. The Number Portability Company has implemented the necessary systems and is understood to be ready to begin porting fixed line numbers.

Telkom Confirms Bid For TelOne

Telkom South Africa has confirmed that it is in talks with Zimbabwe's state-owned incumbent fixed line operator TelOne with a view to forming a strategic partnership in which the South African national PTO would assume a management role at its Zimbabwean counterpart.

However, Charlotte Mokoena, CEO of Telkom’s Management Services department, told local press that contrary to some reports, Telkom is not bidding to buy a stake in TelOne. Previous announcements by Zimbabwe’s government have implied that Telkom was negotiating a stake purchase in the cash-strapped telco, alongside several other companies interested in partnering the PSTN operator or the country’s struggling state-run mobile operator NetOne.

The list of interested parties includes another South African company, cellular heavyweight MTN Group. Mokoena continued by saying that Telkom ‘is close to concluding an agreement, to provide management services, such as professional engineering and other functional services, to assist TelOne to prepare and build for the future.’

Malawi Threatens to Withdraw G-Mobiles Licence

South Africa's Beryl Telecoms has reportedly engaged Telkom SA to take over the management of the Malawi's delayed 3rd mobile network operator, G-Mobile. The operator itself is under threat of losing its license if it doesn't launch its network by the 12th April.

Beryl Capital and Telecoms was contracted last year to manage the roll out of its network, which was due to have been completed at the end of last year. When G-Mobile was awarded its license last April, it said that it was expected to invest US$40 million in the venture within the first five years of operations.

G-Mobile conceded that the new deadline is very tight, raising fears that the company could dissolve even before rolling out its services.

According to statistics from the Mobile World analysts, the country ended last year with just under 2.6 million customers, which represents a population penetration level of around 18%. The country has two active mobile networks, Zain and Telecom Networks Malawi.

MTN and Telkom SA Target Stakes In Zim's NetOne & TelOne

The government of Zimbabwe confirmed this week that South African cellco MTN and fixed line operator Telkom South Africa are persisting with advances to buy stakes in two Zimbabwean state-run companies, mobile operator NetOne and incumbent PTO TelOne, respectively.

Local newspaper The Herald reports that the South African firms are amongst several foreign companies that have expressed interest in buying stakes in the two operators. A senior state official was quoted as confirming that MTN and Telkom had made formal bids for the cash-strapped pair, adding that the government was in the process of considering the bids and that the respective investment proposals would soon be presented to Cabinet. According to the unnamed official: ‘Several firms have expressed interest in [NetOne and TelOne] and we are in the process of conducting due diligence on these bids. They will soon be presented to Cabinet before we choose the winner.’

An injection of foreign capital into the underfunded networks of TelOne and NetOne would further the aims of the Zimbabwean government in the communications sector. At the beginning of this week the Ministry of Information Communication Technology unveiled its new National Information Communication strategic plan that will run from 2010 to 2014.

ICT minister Nelson Chamisa said the strategic plan would address issues of infrastructure development and management, assist in the establishment of a governance regime, ICT utilisation, e-business and e-government, cyber security, ICT investment and partnerships. In addition, the plan would also focus on promoting research and development in ICT and also mobilisation of resources to achieve the ministry's mandate of transforming the sector.

‘This strategic plan... promotes the emergence and convergence of information and communication technologies... to transform Zimbabwe into a knowledge society, and pulls the entire nation around a single vision,’ said Mr Chamisa on Monday. The Ministry has already finalised its ICT Bill and is awaiting approval from Cabinet before the legislation goes to Parliament for further scrutiny; Chamisa announced that efforts were being made to pass the bill to the legislature ‘soon’.

Vodacom Cuts Its Broadband Charges

Ermano Quartero, managing executive of Vodacom Business, has announced his firm has implemented a range of broadband price cuts which will see business clients pay, on average, 50% less for broadband usage, BusinessDay reports.

Quartero said that the cut had been made possible by ‘increasing competition between undersea cable providers, which in turn creates a sustainable competitive international bandwidth market in South Africa.’  SEACOM, a 15,000km, 1.28Tbps cable system connecting South Africa with Europe and Asia, launched operations, pledging to reduce bandwidth charges across Africa.

The cable partially liberated the South African market, which had previously relied on a single submarine cable, the Telkom-controlled SAT-3, to provide the bulk of international traffic. On 20 November 2009 SEACOM expressed its disappointment in a lack of take-up in South Africa, stating that incumbent operators would need to take the lead and drop prices to see broadband expansion in the country.

However, Quartero claims that today’s cuts could spur on a spate of price reductions nationwide, saying: ‘This cut is absolutely permanent: the price can never come up, because the pressures are just too extreme.’

Neotel Plans Individual Fixed Line Number Portability

South African second network operator (SNO) Neotel has announced plans to implement individual fixed line number portability in April 2010.

Angus Hay, executive head of technology at Neotel, said: ‘The porting of numbers in blocks of 10,000 or 1,000 has been available for some months now. Unfortunately that excluded many businesses, as it is only relevant to very large corporations. We are already testing 100 block porting, and as of April will be able to do 100 block and individual porting for any customer.’

Neotel believes that the introduction of individual number porting will increase competition in the sector, challenging fixed line incumbent Telkom South Africa’s dominant market position. Hay added: ‘This is what South Africans have been waiting for, the ability to port their individual fixed line telephone numbers. This truly puts consumers in charge of their own destiny when it comes to service providers.’

ISP's Support Infraco Over Telkom Monopoly

The Internet Service Providers Association of South Africa (ISPA) has released a statement backing state-owned cable operator Broadband Infraco to break Telkom’s stranglehold over national infrastructure, mybroadband.co.za reports. According to ISPA, the award of an individual-electronic communications network services (I-ECNS) licence from state regulator the Independent Communications Authority of South Africa (ICASA), along with its extensive fibre network which Broadband Infraco inherited from Transtel and Eskom, will allow the operator to realise its mandate of boosting the country’s broadband connectivity and bandwidth availability while lowering the cost of communications nationwide. The crippling cost of bandwidth has held back the South African data market, leaving Africa’s largest economy with a broadband penetration of just 2% at the end of September 2009.

In a press statement, ISPA said: ‘Broadband Infraco, provided it sticks to its mandate as a supplier of wholesale infrastructure to other operators and service providers, could redress this problem and help to spur greater competition in the market. At the same time, given the history of state-owned enterprises in the telecoms industry, ISPA will keep a vigilant eye on Broadband Infraco's activities to make sure that South Africa derives the maximum benefit from its activities… We believe that it is of great importance to ensure that this promising new venture does not eventually evolve into a partially privatised company with a profit motive and unfair advantages that competes against the private sector. Given the challenges facing the South African telecoms industry, we simply cannot afford to get this wrong.’

Four ZAMTEL Bidders Submit Bids

Of the eight companies shortlisted in the sale process of a 75% stake in Zambian fixed line incumbent Zambia Telecommunications Company (Zamtel), only three have submitted bids. According to the Times of Zambia the three foreign companies to submit their offers to the Zambia Development Agency (ZDA) for the telco are India’s Bharat Sanchar Nigam Ltd (BSNL), Unitel of Angola and Libya-based LAP Greencom.

A fourth bid, from a consortium of Russia’s Vimpelcom and the telecoms arm of the Alfa Group, Altimo, was understood to have been sent on time, but reportedly arrived at the ZDA offices five minutes after the submission deadline as a result of ‘logistical reasons’. The bid however was still considered, and the ZDA board confirmed that Altimo’s non-binding offer had been accepted today. The four companies that had been shortlisted but chose not to bid were Telkom South Africa, BSNL’s fellow state-owned Indian telco Mahanagar Telephone Nigam Ltd (MTNL), Portugal Telecom and a consortium of Egypt-based Orascom Telecom and its subsidiary Telecel Globe.

ZDA acting director general, Muhabi Lungu, after opening the bids said the ZDA would now study the offers, while also passing the details on to the board of Zamtel for its evaluation. Mr Lungu has stated that the ZDA will announce which of the companies will move on to the next stage in the sale process on 11 January 2010, where another due diligence would be undertaken before the successful bidder is chosen.