South Africa: Telkom and Vumatel in fibre partnership discussions


Telkom and Vumatel are in discussions about a fibre-to-the-home partnership, which will significantly increase the reach of both companies.

Telkom and Vumatel are growing their fibre-to-the-home footprints, and are currently in a land-grab for areas which are suitable for fibre deployments.

Vumatel recently concluded a finance deal with Standard Bank that will see the fibre provider ramp up delivery and expand into new markets in South Africa.

A challenge for these companies is that when a fibre provider is present in an area, it significantly reduces the attractiveness for a second player.

The business case for Telkom to enter an area where Vumatel is already operating, for example, disappears.

Telkom CEO Sipho Maseko highlighted this challenge in 2015, saying they face “relentless pressure” from smaller fibre providers who are nimble and cherry-pick the suburbs they want to service.

An easy way to resolve this challenge is for the companies to partner, and – according to two independent sources close to Vumatel and Telkom – this is what the companies are discussing.

Details about the potential fibre partnership are limited, and the two companies would not divulge much information about the discussions.

Vumatel CEO Niel Schoeman told MyBroadband that the information is not far off the mark, but he is currently not in a position to comment further.

Telkom spokesperson Jacqui O’Sullivan told MyBroadband the company engages with industry players on a regular basis, looking to see where partnerships or collaborations might add value to their customers.
Source: MyBrodband 21 April 2016