South Africa: Telkom in talks with MTN on network sharing


A deal between the telecommunications giants could help reduce the cost of wireless business.

Telkom shares increased as much as 5.1% and traded 2.8% higher at R33.09 as of 12.02pm in Johannesburg.

Telkom, Africa's largest landline provider, is in talks with the MTN Group to share the companies’ mobile-phone networks.

The discussions focus on the "potential outsourcing of the operation of the Telkom radio access network to MTN," Pretoria- based Telkom said in a statement on Thursday. The companies may also strengthen their relationship to include roaming on each other's networks, it said.

A deal between the two South African carriers would help Telkom reduce the cost of its wireless business while giving MTN, the continent's largest mobile operator, access to some of Telkom's spectrum, a person familiar with the matter told Bloomberg News this week. A successful deal "may have a material effect on the price of Telkom’s securities," Telkom said.

Telkom shares increased as much as 5.1%, the most on an intraday basis in more than a month, and traded 2.8% higher at R33.09 as of 12.02pm in Johannesburg. The stock has gained 18% this year.

MTN has been reducing its network of towers by selling and then leasing them in Rwanda, Zambia, Cameroon and Ivory Coast as it cuts operational expenditure. Telkom paid R1.1-billion to other mobile network operators in the six months through September, compared with R1.48-billion a year earlier.

Telkom, which has had five leaders since 2007, is struggling to revive revenue among consumers in a country that has leapfrogged fixed-line technology in favour of smartphone devices that are driving a boom in data usage across Africa.

The company is trying to lower expenses, especially in its mobile business, which Chief Executive Sipho Maseko said he wants to reduce by at least 50%.