Telkom's expansion beyond South Africa's borders took another step forward with the finalisation of a transaction with Nigerian-based Multi-Links Telecommunications Limited that will result in its holding company, Kenston Investments Limited, transferring 75% of its equity shareholding in Multi-Links to Telkom.
The $280 million deal provides Telkom with a strong footprint in Nigeria, Africa's largest market and fastest growing telecoms market, and gives the company a springboard for further expansion into other countries in West Africa.
"The size and nature of growth of the Nigerian telecoms market, its low tele-density of only 20% and its pent-up demand for Internet access demonstrates that there is immense potential for future growth, making this an ideal acquisition," said Telkom CEO, Papi Molotsane, adding that certain conditions precedent remain to be fulfilled by both parties.
Multi-Links is Nigeria's pioneer private telephone operator (PTO) and the second largest PTO in the country in terms of its subscriber base of 162 000, but boasts the most number of subscribers in the capital state of Lagos.
It was also the first telecommunications operator in Nigeria to introduce Code Division Multiple Access (CDMA) technology, a digital technology that enables the provision of more efficient and cost-effective wireless solutions.
Significantly, CDMA is a fixed-mobile technology, and because of Multi-Links' national spectrum allocation, the company is able to offer nationwide mobile and fixed services.
"From this perspective, Multi-Links not only meets Telkom's broader investment criteria but also provides us with the opportunity to expand our mobile capability," stated Molotsane.
Multi-Links also has a unified licence, which enables it to offer a diverse array of services. Its initial licence enabled the provision and operation of fixed terrestrial networks. In 2005, Multi-Links was awarded a long-distance licence, allowing the company to launch operations in a number of new cities. A year later, Multi-Links was granted a unified access service licence (UASL) which made it possible for the company to provide mobile telecoms services as well as Internet and other data services.
"The Multi-Links deal is strategically aligned with Telkom's corporate goals of growing our revenue base by expanding into areas where there is growth potential, healthy returns and value creation for our shareholders. It is part of the company's drive towards investing in and enhancing our longer-term future, while creating more value for our customers and shareholders alike," said Molotsane.
He added: "Multi-Links is a medium-size investment that allows Telkom to demonstrate its management skills and capabilities in a foreign environment. There will be immediate control of the company at board and operations level which will enable us to manage our investment more effectively and efficiently."
Telkom's deal with Multi-Links follows February's acquisition of Africa Online, an Internet service provider on the African continent which affords Telkom a footprint into nine African states (Kenya, Tanzania, Uganda, Ghana, Cote d'Ivoire, Namibia, Swaziland, Zimbabwe and Zambia).
Earlier this month, the company was one of 23 signatories to a labour supply contract with Alcatel-Lucent relating to the Eastern Africa Submarine System (Eassy) cable project.
"These are exciting times for Telkom. Despite the challenges of a rapidly evolving telecommunications landscape, we are on course towards becoming the preferred telecommunications services provider and partner in Africa, providing the full spectrum of ICT solutions on the continent including voice, data, video and Internet services," concluded Molotsane.
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