South Africa’s Telkom has unveiled details of a network sharing pact with larger rival MTN, a few months after the company said it was exploring options for its struggling mobile business.
Under the agreement, pan-African MTN will take over financial…
South Africa’s Telkom has unveiled details of a network sharing pact with larger rival MTN, a few months after the company said it was exploring options for its struggling mobile business.
Under the agreement, pan-African MTN will take over financial and operational responsibilities for the rollout of Telkom’s radio access network.
The companies have also inked reciprocal roaming agreements, which extend an existing partnership and allow their customers to fully access each of the networks.
However, Telkom’s and MTN’s mobile operations will continue to operate under separate brands, maintain their own distribution network, client service infrastructure and billing activities.
Standard Bank provided advice on the transaction, which is subject to regulatory approval.
Telkom CEO Sipho Maseko said last November that his company was in talks with several parties about its mobile business, the smallest in South Africa.
At the time, Maseko attributed most of the unit’s difficulties to the fact that it was “late to the market” but added that Telkom will always need a mobile business.
In a statement today, Telkom said the pact will allow customers to access “state-of-the-art” 2G, 3G and LTE networks without significant capex for the company, at a time when South Africa is “facing an unprecedented shift from traditional voice towards data”.
The country’s dominant operators are Vodafone’s Vodacom, followed by MTN, Cell C and Telkom.
Alan Knott-Craig, the CEO of Cell C, said in June last year that consolidation was “one way to solve a lot of problems” in the South African mobile market.
Knott-Craig did not provide details about merger talks he had held with Telkom but added that with “120% saturation”, the only way smaller operators can attract new customers is by taking them “from the larger networks and the only way they do that is by bringing prices down”.
It is however very difficult for Cell C and Telkom to achieve sustainability, said Knott-Craig, who called for regulatory changes to support the two players.
