Telkom Mobile attracts ZAR32bn investment offer; Neotel reduces network latency

22 Jan 2014

South African cellco Telkom Mobile has reportedly attracted the interest of a number of south-east Asian companies who are willing to invest up to ZAR32 billion (USD3 billion) in the struggling unit. According to BusinessTech, the investment will allow Telkom to ‘free up cash flow for other CAPEX requirements, as well as provide growth potential for the mobile business and also empower and increase potential job creations’. The article notes that an as-yet-unnamed investment company has proposed to buy up to 1,600 Telkom towers and then build an additional 8,400 base transceiver stations (BTS), in order to raise the cellco’s competitiveness against rivals MTN South African and Vodacom. Elsewhere, another offer would see investment to the tune of USD3 billion, which would include the establishment of factories for the construction of tower infrastructure. Meanwhile, further details pertaining to a potential investment from a Malaysian firm remain confidential.

A Telkom spokesperson responded to the claims by stating: ‘Telkom continues to review its operations in an effort to stabilise the business and unlock its value. The company is therefore engaging with various parties to consider best options for the business, however Telkom is not in a position to disclose any further details at this stage. We will inform the market and all our stakeholders of the outcome of the discussions at the appropriate time.’

According to TeleGeography’s GlobalComms Database, in November 2013 reports in local media suggested that MTN South Africa was putting together a takeover deal for its smaller rival Telkom Mobile, although it was later reported that the two companies were actually in discussions regarding an infrastructure sharing arrangement for their respective mobile units. With question marks over its long-term viability pushed to the fore, Telkom Mobile was strongly linked to a merger with the better-established Cell C, although no concrete developments had been confirmed on that front either by January 2014.

In other news, South Africa’s second national operator (SNO) Neotel has revealed that it has invested heavily to reduce network latency to a range of 220 milliseconds between South Africa and the BRIC countries – Brazil, Russia, India and China. Abid Qadiri, chief of business solutions and excellence at Neotel, said that the operator is currently the only telecoms company in South Africa that has capacity on all five undersea cables, which provides for redundancy as well as for optimal routing to various parts of the world. The executive added: ‘We always route traffic via the shortest path…This reduces the distance that packets need to travel, which differs from many other ISPs in the South African market that route all traffic via Europe in order to communicate with the rest of the world. Improvements in latency allow applications to run better, faster and smoother than before.’

South Africa, Telkom South Africa (incl. Telkom Mobile [formerly 8ta]), Neotel (South Africa),

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