x
DSL/vectoring/G.fast

Oger Enters Telkom SA Fray

Oger Telecom has inserted itself into speculation over the future of South African incumbent Telkom SA Ltd. (NYSE/Johannesburg: TKG), which is in the midst of a strategic review, by making an offer for the operator.

In a statement to the Johannesburg Stock Exchange after market close January 22, Telkom confirmed it has received a "non-binding expression of interest" from Oger, whose holdings include a 75 percent indirect stake in South African mobile operator Cell C . "While Telkom is not presently in discussions with Oger, the Board of Telkom will consider the Oger approach along with other alternatives as part of the review," it said.

Fixed-line provider Telkom, one of the largest emerging market carriers in the world by revenues, is in the process of reviewing its mobile strategy as it looks to build an IP-based next-generation network. (See Top Ten: Emerging Markets Carriers.)

The statement notes that the operator "is pursuing all options to enhance the Company's strategic positioning and service delivery in the converging fixed-mobile telecommunications industry."

Telkom was in talks late last year to sell part of its 50 percent stake in mobile operator Vodacom Pty. Ltd. to its partner Vodafone Group plc (NYSE: VOD), while it would merge its fixed-line operations with African major MTN Group Ltd. Those talks failed, sending Telkom back to the drawing board. (See Telkom Slumps as Talks Dissolve.)

South Africa's ITWeb has reported that MTN has resumed talks with Telkom, and Oger's offer will force MTN to approach a potential deal with more urgency.

Vodafone has repeatedly said it's keen to increase its 50 percent of Vodacom to a majority ownership, which is likely to happen once Telkom finds another mobile company to hook up with. Analysts say the carrier has always had an uneasy relationship with Vodacom, and it seems to be leaning toward divesting its stake and teaming up with a different partner to create a converged fixed/mobile offering.

But analysts argue that Cell C, South Africa's smallest mobile operator behind Vodacom and MTN with around 3.4 million subscribers, is a less than ideal partner for Telkom to maintain its presence in the mobile market. Cell C is yet to turn a profit after six years in business. Oger had previously considered selling its stake in the operator, perhaps even to Telkom.

Oger Telecom, a subsidiary of Middle Eastern construction company Saudi Oger, also holds stakes in Turkish fixed-line operator Türk Telekomunikasyon A.S. and its mobile unit Avea, and Cyberia, an ISP with operations in Saudi Arabia, Lebanon, and Jordan.

Paul Doany, Oger Telecom's CEO, told reporters the company "submitted an offer which we believe to be in the interest of both Telkom and Cell C. We hope to see progress with this soon."

He did not disclose the value of the offer, but said Oger would invest some of the proceeds from the $2.56 billion sale of a 35 percent stake to Saudi Telecom announced over the weekend. About $830 million will be paid to shareholders as a dividend. (See Saudi Telecom Buys $2.6B Oger Stake.)

Shares in Telkom climbed 7.44 percent higher yesterday ahead of the announcement, and closed up another 6.34 rand, or 4.69 percent, higher Wednesday at 141.45 South African Rand (US$19.59).

— Nicole Willing, Reporter, Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE