Mergers, Acquisitions and Financial Results

South African fixed-line operator Telkom has confirmed that it has bought 75 percent of Multilinks for $280 million to expand further outside its home base.  This acquisition has already raised Telkom's shares to 1.3 per cent higher at 167.99 Rand in the Johannesburg Stock Exchange.

Telkom Chief Executive Papi Molotsane was quoted as saying that "The size and nature of growth of the Nigerian telecoms market, its low teledensity of only 20 per cent and its pent up demand for Internet access demonstrates that there is immense potential for future growth, making this an ideal acquisition."

Experts say Multi-links has basic technologies that would aid Telkom to achieve success in the deal. "What would be interesting to see on the mobile side was how Vodacom would get involved. There are lots of potential. It is a great acquisition and the price they (Telkom) paid seems not to be over the top," noted some South African experts. This, they believe will provide Telkom with good growth opportunities.

Telkom also acquired Africa Online in February for $20.27 million in its quest to expand its market. Telkom has been trying for several years to break into new markets but in previous attempts, it had to scrap a plan to push into Nigeria through Vodacom.

The change in ownership structure of Multilinks has received regulatory approval from the Nigerian Communic-ations Commission (NCC). Executive Director of Multilinks, Chief Ezekiel Fatoye, confirmed that NCC has granted an "anticipatory approval" for the sale. Based on licensing stipulations, operators have to obtain clearance from NCC when they plan to change ownership structure of their business.

Telkom's acquisition of Multilinks is coming after MTN Nigeria acquired another PTO, VGC Communications Limited for $65 million. Speculations have been rife that Vodacom, South Africa's top mobile operator, has been in talks with some Nigerian operators including Multilinks.

Multilinks, the first operator to introduce the CDMA 2000 1X technology supporting wireless telephony and internet services, said last year that it has recorded over 100,000 subscribers and projected to grow the number to over 500,000 by the end of 2006.

This second acquisition by South Africa’s Telkom means that its largely unsuccessful acquisition strategy has begun to turn a corner. Other acquisitions will undoubtedly follow.

This Day