Telkom Mobile will use MTN's network for the beginning phases of its life, following the signing of a five-year agreement by the companies.
The deal could see the first signs of a true Telkom Mobile offering before the end of this year.
The official announcement puts to rest speculation that Telkom and MTN have been close to a deal since early March; however, it has sparked new speculation that a bigger plan may be in the pipeline.
Since its divestment from Vodacom, Telkom has pushed two strategies that it hoped would fill the revenue gaps left by the sale of the mobile operator. The first was to create a mobile presence in SA. The deal with MTN represents the first steps. The second is to grow its African footprint.
Telkom would always have had to sign a roaming agreement with one of the mobile operators. However, many expected the fixed-line business to go with its former subsidiary, Vodacom, since a relationship already exists.
However, a deal with MTN fits with both of Telkom's strategies for growth. “The agreement paves the way for Telkom to launch its mobile service later this year, by offering its customers seamless access to a stable MTN SA network with a substantial national footprint, while continuing to roll out its own mobile base stations,” says Pinky Moholi, MD of Telkom SA.
A deal with MTN could be an indication of where Telkom plans to take its mobile solution. MTN has the largest mobile presence in Africa, and Telkom has been punting its own African expansion plans.
Is there more?
Chris Gilmour, Absa Investment analyst, says the agreement between MTN and Telkom could be more telling than expected. “Many people expected them to sign with Vodacom. MTN's relationship with Neotel really should make them arch rivals,” he adds.
He says, while there is every possibility that this deal is just a deal, MTN's African presence and its need to increase network traffic for profits could indicate a bigger plan is in motion. “This could well be a precursor to something far bigger,” notes Gilmour.
MTN has the largest presence in Africa of all South African operators, covering around 21 countries. With Telkom's need to spread its wings in an already heavily competitive African market, Telkom could be looking to leverage a relationship with MTN.
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