Telkom talks terminated

By Kimberly Guest for Telkom
Johannesburg, 28 Nov 2007

Telkom`s discussions with MTN, Vodafone and other parties who "expressed interest" have been called off.

In a statement to shareholders this morning, Telkom said it and MTN had been unable to find an agreement which would benefit all shareholders concerned.

"After detailed investigations into the strategic, operational and regulatory aspects of such a transaction, the parties were unable to conclude a transaction in the best interests of their respective shareholders. This decision was driven primarily by matters related to the anticipated costs and benefits of the implementation of the transaction," it said.

Cellular giant MTN issued a similar notice to shareholders at the same time.

The market has been dominated by heated debate on the matter since the companies first confirmed discussions were under way in early September.

Mobile strategy review

Telkom also noted that discussions with Vodafone were dependent on agreement being reached with MTN. As these negotiations have failed, the discussions with Vodafone have been called off, it said.

Telkom and Vodafone are equal shareholders in Vodacom.

Earlier this month, Vodafone CE Arun Sarin said he expected the Telkom mobile strategy review to take another two months.

"At that stage, we will have more information on what is available at Vodacom. We have made our point of view clear, which is if a percentage of Vodacom is made available at a reasonable price, then we would be interested in that stake," he added.

New negotiations will have to take place if Vodafone hopes to increase its stake in Vodacom.

However, the fixed-line operator did not this morning indicate whether the termination of talks with Vodafone impacted on its mobile strategy review.

Instead it said: "Telkom will continue to pursue all options to enhance the company`s strategic positioning and service delivery in the converging fixed-mobile telecommunications industry."

Other parties

Telkom`s announcement also reveals that it was approached by other players.

"While certain expressions of interest were received from other parties concurrent with the above process, no discussions are currently taking place," it said.

The company does not reveal how many additional expressions of interest it received or who these players are.

At the time of publishing, ITWeb had been unable to reach Telkom group executive for corporate communication Lulu Letlape; MTN group executive of corporate affairs Nozipho January-Bardill; or a Vodafone spokesperson.

Vodacom`s chief communications officer Dot Field said the company was unable to comment as it is a "shareholder matter".