Telkom has entered into a heads of agreement with MTN SA, in a move that will see each party being able to roam on either operator's network.
The heads of agreement, which lays out the particulars of a tentative agreement, explains that the parties intend to conclude network management services and reciprocal roaming agreements, whereby MTN will take over financial and operational responsibility for the rollout and operation of Telkom's radio access network (RAN).
Telkom CEO Sipho Maseko says the move is in keeping with the company's plans to de-risk its mobile business. "[Telkom has] explored various options in recent months. The conclusion of an agreement will allow us to expand our mobile coverage and to reduce our operating costs and capital expenditure significantly."
Mutual benefit
He says the partnership will enable Telkom to provide its customers with effective access to the latest national voice, 2G, 3G and long-term evolution (LTE) networks without having to incur the hefty capital expenditure typically required to achieve such national coverage.
"Both Telkom and MTN will have access to increased voice and data capacity, improved voice quality, and faster data speed, at a lower cost than would have otherwise applied."
Telkom says the proposed transaction will allow it to maintain a mobile offering that supports a converged product set in the consumer and enterprise segments.
"It is important to note that Telkom will continue to define and manage its own mobile products and services and market itself under the Telkom brand. The company's channels and distribution network, client service infrastructure and billing channels will be unaffected by this agreement. Telkom will continue to run these services as it currently does.
"Telkom will maintain and evolve its mobile core network and systems, and continue providing differentiated products and services to the market."
Maseko notes the potential deal is not a mobile virtual network operator, service provider or reseller relationship. "It is a ground-breaking means to outsource the operation of our RAN for scale and efficiency, while retaining and enhancing our competitive differentiation and flexibility."
He says the agreement will allow Telkom to increase competitiveness and improve capabilities to compete at both wholesale and retail levels.
The transaction is subject to the conclusion by the parties of various binding commercial agreements to give effect to the proposed transaction.
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