SA's dominant fixed-line company, Telkom, is now set to sell its entire Multi-Links business to an associate of former adversary Helios Towers Nigeria for $10 million - or R68 million.
Earlier this month, Telkom said a sale of the CDMA unit, the bulk of the business, to Nigeria-based Visafone for $52 million (R350 million), fell through because all the conditions were not met.
Late yesterday, the company told shareholders it would sell the entire business to an affiliate of Helios Towers Nigeria for only R68 million. The deal is expected to be wrapped up in August.
Helios took Multi-Links to court in a bid to force it to honour a master lease agreement, which Multi-Links cancelled last December. Helios won its court bid and the parties continued to operate in terms of the deal.
The Nigerian company was also suing Multi-Links for damages of $251 million, which was pending at the time of Telkom's announcement yesterday. The legal issues caused the Visafone deal to fall through.
Chairman Lazarus Zim says the company sees the deal as a “win-win transaction that will yield benefits to both sets of shareholders”. He says the process will benefit all Multi-Links' stakeholders, especially its employees and customers in Nigeria.
Telkom CEO Nombulelo “Pinky” Moholi says: “We are glad that we have been able to negotiate an agreement which will enhance the strategic focus for Telkom.”
Cash burn
Multi-Links has been a thorn in Telkom's side since the company initially invested in Nigeria about four years ago. Telkom has had to write the company down by more than R5.6 billion since then.
Telkom said during its results presentation for the year to March that it had stopped the “cash burn” at Multi-Links as it had ceased funding the embattled unit. Under the agreement, Telkom will now provide interim funding to Multi-Links to facilitate the deal.
The deal is subject to certain conditions and Telkom will benefit from any potential upside if Multi-Links is sold again within three years.
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