Telkom will try to save its ailing African Internet service provider (ISP) business by integrating Africa Online and MWeb Africa to form iWay Africa by September.
However, this may achieve little as Frost & Sullivan ICT industry analyst Spiwe Chireka argues that Telkom's pan-African ISPs, Africa Online and MWeb, continue to perform dismally.
Telkom bought all of MWeb Africa and a 75% stake in MWeb Namibia from Naspers in 2008, for R610 million.
“Three years after acquiring Africa Online, the subscriber numbers have stalled and MWeb may also be headed in that direction,” she predicts.
Speaking at Telkom's final results presentation, held in Sandton yesterday, CEO Reuben September noted the goal of the integration is to drive the ISP business in Africa up the ICT value chain.
He explained that this would be achieved by developing a pan-African major city-to-city backbone infrastructure, as well as sub-Saharan hub-to-international cable access infrastructure.
Once the integration of the companies has been completed, iWay Africa will be administered by one board of directors, one executive committee and single country managers. The newly-integrated company will cover 32 African countries, including primary locations and distributorships, he stated.
However, Telkom will have to up its game if it is to succeed in achieving its goal. “With a new CEO coming in at the end of this year or early next year, hopefully things will improve for Telkom,” says Chireka.
strategy. If that doesn't happen, whoever takes over will simply continue a legacy of what has not really worked, especially in terms of Telkom's African strategy."
She argues that Africa offers opportunities for growth and urges Telkom to take advantage. “Competition in the South African market has become cutthroat, especially due to the new licensing regime and the arrival of Seacom," Chireka notes.
“Neotel is also slowly but surely gaining momentum. Telkom, therefore, needs to start shopping outside of these borders and do so fast. The rest of Africa is still a potentially lucrative growth area for the operator, but opportunities are becoming scarce."
September also offered an update on Telkom Managed Services (TMS). The body was created to provide consultancy services to telecommunications operators in Africa to improve their performance by providing network, IT, vendor and funding strategies, hands-on management and technical expertise best suited to meet their challenges.
TMS is exploring opportunities in Malawi, Zimbabwe, the Democratic Republic of Congo, Liberia, Angola, Ghana, Uganda, Botswana, Namibia, Lesotho and Swaziland, he noted.
“The major obstacle to ramping up this business is securing funding on behalf of operators in Africa. We are currently working on innovative solutions with a number of financial institutions,” concluded September.
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