TELKOM SOUTH AFRICA TO BUY INTO UGANDA TELECOM

Mergers, Acquisitions and Financial Results

Telkom South Africa is in final stages of buying into Ucom, the consortium that owns 51% shares in uganda telecom. Uganda telecom's corporation secretary Donald Nyakairu said the two entities are at the price negotiation stage after completion of due diligence on both sides. The Government owns 49% shares in uganda telecom. If Telkom SA succeeds with this purchase it will be a first after a long run of unsuccessful attempts to buy other companies both on the continent and elsewhere.

Telkom South Africa is a state-controlled company that also owns 50% of Vodacom, the largest telecommunications company in South Africa. The company is looking for expansion opportunities outside South Africa as it faces competition from the second national operator and from service providers like value-added network services.

Telecom analysts say the Ugandan market is "extremely" attractive because less that 150,000 people have fixed lines out of a population of over 27 million.

Telkom South Africa provides business and residential fixed line telephony, Internet and e-commerce data communications, satellite and broadcasting services. If completed, the deal is expected to boost uganda telecom, which intends to spend about $80m (sh140b) to strengthen its network. Uganda telecom has about 500,000 mobile phone subscribers and about 100,000 fixed line subscribers. The Ucom consortium is 60% held by Telecel, while Germany's Detecon and Egyptian group Orascom hold 20% each.

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