South African fixed-line operator Telkom has finally sold the CDMA operation of its embattled Nigerian unit Multi-Links for $52 million to a Nigerian CDMA operator.
Multi-Links has been a thorn in Telkom's side since the company initially invested in Nigeria about four years ago. The fixed-line operator has written the unit down by more than R5.6 billion since entering the West African country.
Telkom bought 75% of the company in May 2007, for R1.96 billion. In January 2009, it bought out the balance of Multi-Links, investing a further R1.224 billion in the company.
The company announced its intention to get out of the CDMA business last November during its interim results presentation. Yesterday, Telkom and Visafone Communications signed a deal that will see Visafone buy the CDMA business for the $52 million, or about R350 million.
Telkom will keep Multi-Links' fibre network and fixed-line operations. CEO Nombulelo 'Pinky' Moholi, who took over as CEO this month, recently said the sale was at an “advanced” stage, and the company hoped to have wrapped the deal up by the end of March.
Telkom's former acting CEO Jeffrey Hedberg says the sale “represents the best option available to our shareholders and Multi-Links' customers”. He says the company is pleased to wrap up the conclusion of “realigning our business model to focus on our core competencies”.
Visafone founder and chairman Jim Ovia says the “deal will solidify its position in the Nigerian marketplace”.
Visafone is a Nigerian cellular operator that was launched in 2007. It was formed out of the acquisition of three CDMA mobile network operators that had already been in operation for eight years. It has more than three million subscribers.
Telkom's proceeds will be “net of the existing liabilities of Multi-Links' CDMA business”. The deal is conditional on regulatory approvals.
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