Telkom South Africa Plans to Grow Nigeria's Multi-Links

Mergers, Acquisitions and Financial Results

Telkom South Africa plans to invest more than R4.3bn to expand the network and services being offered by Multi-Links, the majority-owned Nigerian private telecommunications firm it acquired last year for US$280m.

The expenditure is part of an expansion programme of more than R11bn that Telkom, Africa's largest fixed-phone operator, will incur during the 2009 financial year as part of an investment strategy to consolidate its position as a leading pan-African telecommunications operator.

Telkom said it wanted to expand the subscriber base of Multi-Links from more than a million customers as of May to 3- million next year. "Capital expenditure of $160m was spent during the 2008 financial year to accelerate the expansion of Multi-Links' network and quality operating systems," Telkom CEO Reuben September said on Tuesday.

"We plan to invest $533m in capital expenditure for the 2009 financial year to further extend the network and services, and take advantage of the enormous growth opportunities in Nigeria."

Multi-Links operates in several Nigerian cities on a CDMA platform. This is the cellular technology that competes with the standard GSM mobile technology on which many cellular networks operate. Multi-Links has been given a unified licence to offer the full complement of roaming, voice, internet and data services.

The company generated revenue of R845m and a loss before tax of R63,5m in the year to March, but a tax credit helped Multi-Links to post a profit after tax of R49m.

"Multi-Links' strategy will focus on brand awareness and promotional campaigns to increase revenue of fixed-wireless and mobile customers," Telkom said. "The prospects for Multi-Links are good and the company intends to capitalise on Telkom's brand and access to international connectivity."

Telkom Acting Chief Finance Officer Deon Fredericks said the group's capital expenditure programme during 2009 would total R11,3bn, with at least R7bn earmarked for investments on its fixed-line network and the balance on Multi-Links.

Telkom was targeting compound annual revenue growth of up to 10% in the next three years, and expected to benefit from increased revenues from data, broadband and converged businesses, as well as from its subsidiaries.

Business Day