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07 March 2014

Telkom and MTN South Africa announce signing of heads of agreement

Telkom today announced that it has entered into a Heads of Agreement (HoA) with MTN South Africa (MTN).

This HoA explains that the parties intend to conclude network management services and reciprocal roaming agreements, whereby MTN will take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network (RAN).

Each party will be able to roam on either party’s network.

Telkom CEO Sipho Maseko said, “In keeping with our plans to de-risk our mobile business we have explored various options in recent months. I am pleased that we are at this stage of engagement with MTN. The conclusion of an agreement will allow us to expand our mobile coverage and to reduce our operating costs and capital expenditure significantly.

“We will be able to provide our customers with effective access to the latest state- of- the- art national voice, 2G, 3G and LTE networks without having to incur the significant capital expenditure ordinarily required to achieve such national coverage. Both Telkom and MTN will have access to increased voice and data capacity, improved voice quality, and faster data speed, at a lower cost than would have otherwise applied,” continued Maseko.

The proposed transaction will allow Telkom to maintain a mobile offering that supports a converged product set in the consumer and enterprise segments. It is important to note that Telkom will continue to define and manage its own mobile products and services and market itself under the Telkom navbar-brand. The Company’s channels and distribution network, client service infrastructure and billing channels will be unaffected by this agreement. Telkom will continue to run these services as it currently does.

Telkom will maintain and evolve its mobile core network and systems and continue providing differentiated products and services to the market.

“This is not a mobile virtual network operator (“MVNO”), Service Provider or Reseller relationship; it is a ground-breaking means to outsource the operation of our RAN for scale and efficiency, whilst retaining and enhancing our competitive differentiation and flexibility,” said Maseko.

“This agreement will allow us to increase competitiveness and improve our capabilities to compete at both wholesale and retail levels,” concluded Maseko.

The proposed transaction is subject to the conclusion by the parties of various binding commercial agreements to give effect to the proposed transaction

For further enquiries, please contact:

Pynee Chetty

Senior Specialist: Media Relations

Group Communication

Tel:+27 12 642 1716

Mobile: +27 81 389 7874

Email: chettpr2@telkom.co.za

 OR

Leigh-Ann Francis

Specialist: Media Relations

Group Communication

Tel: +27 12 642 1728

Mobile: +27 81 391 4780

Email: francilm@telkom.co.za

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ABOUT TELKOM:

Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

  • fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
  • fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
  • interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
  • fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
  • Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
  • W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
  • mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
  •  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
  • other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.