Huawei bags Telkom network deal

Johannesburg, 23 Jun 2008
Read time 1min 50sec

Telkom has appointed Chinese telecommunications vendor Huawei Technologies to roll-out its multimillion-rand fixed wireless (W-CDMA) network, which will allow the fixed-line operator to provide mobile services.

Huawei has refused to disclose the value of the contract. However, Huawei PR manager Shalate Davhana says the scale of the network is more than 100 000 lines.

An internal Telkom document, outlining the project, shows the incumbent expects to invest R1.7 billion in the network, over a three-year period, with an internal rate of return (IRR) of over 20%.

IRR is a metric used by firms to decide whether they should make an investment.

Telkom previously noted its W-CDMA network roll-out forms part of its mobile strategy.

The network will provide Telkom with full mobility in selected areas, says Davhana.

"This fixed wireless solution provides a network that is more effective than a fixed cable solution, and helps Telkom save in terms of the total cost of ownership," she says.

The network is also expected to alleviate copper theft problems and the impact of theft on service levels, she adds.

Davhana says the network roll-out is already in progress, with the first customer to be connected to the wireless service in September. The project started in Gauteng and will move to other provinces in due course, she says.

Strong growth

Davhana says Huawei has seen strong growth in the sub-Saharan region since it launched its operations more than a decade ago.

The company realised 36% year-on-year growth in 2007, generating over R2 billion in annual revenue, she says.

Huawei completed over 6 000 base transceiver sites and rolled out over 10 000km of fibre optic cable in sub-Saharan Africa in 2007, she says. The company also has 32 branch offices and technical centres in Africa.

Telkom previously noted it was also investing in a W-CDMA network in Nigeria. Telkom owns 75% of Multi-Links Telecommunications in that country.

Related stories:
Telkom at watershed, say analysts
Powerline comms group up for sale

See also