Lesley Stones
11 November 2008
Johannesburg — TELKOM is already cementing its new strategy of becoming a pan-African voice and data supplier with a $63m deal to acquire MWeb Africa and 75% of MWeb Namibia.
Telkom will soon be flush with more than R10bn as it retains half the R22,5bn Vodafone is paying it for a 15% stake in Vodacom.
Telkom CEO Reuben September said last week that cash would be used to increase its network capacity, expand its data services and grow its geographic footprint. But the speed of its first move is still a surprise, and some analysts are yet to be convinced that it has a firm spending strategy.
The sale of MWeb's African assets has been overshadowed by the planned auction of MWeb SA, one of the country's largest consumer-oriented internet service providers. The business was being sold by parent company Naspers, but yesterday Naspers said the sale had been terminated because of global economic conditions. That implies Telkom did not want to buy those local operations, possibly because the deal would have fallen foul of its rivals at competition hearings.
But Telkom does want the assets in other countries, as that will instantly help meet its goals of geographic expansion and more data services.
MWeb Africa is based in Mauritius, with operations in Namibia, Nigeria, Kenya, Tanzania, Uganda and Zim- babwe. It works through an agency in Botswana and has distributors in 26 countries, offering internet services to corporate customers -- in line with Telkom's sharpening focus on corporate clients rather than consumers.
Firming up the details of the Vodacom sale last week, September said Telkom would reinvent itself by "seeking to be Africa's leading fixed and mobile provider".
It needed to increase its international presence in all information and communications technologies through acquisitions, he said. "Expanding beyond the borders of SA provides Telkom with an opportunity to become less dependent on domestic revenue streams."
MWeb SA is firmly focused on consumers, which may be another reason why Telkom did not negotiate a deal that included the local operations. But Telkom cannot be counted out as a suitor if MWeb goes ahead and sells its local assets. Telkom already provides millions of consumers with voice services, and must also offer them data services to stop them defecting to Neotel or giving up on fixed lines and using only the cellular networks. Telkom also knows there is money to be made from high-end consumers, and MWeb is serving the higher-income market.
Fears that competition authorities will scupper any local Telkom deal may fade now that it is shedding its half share in Vodacom. That will weaken it in the telecoms market, so objections to its efforts to rebuild itself through acquisitions may hold less sway.
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