Asha Speckman

TELKOM broke its silence yesterday to confirm that it had entered into negotiations to potentially outsource the management of its radio access network for cellphone-based services to competitor MTN South Africa.

The discussions also included talks about expanding the existing roaming relationship between the parties to include bilateral roaming, Africa’s largest fixed-line services provider said in a brief statement to shareholders.

It added that the negotiations were of a nature that would have a material impact on the company’s shares on the JSE if the deal was successfully concluded.

While news of the discussions leaked to the industry late last year, the companies have until now declined to confirm that they were in talks with each other.

Brian Neilson, a director at technology consultancy BMI-TechKnowledge Group, said the radio access network was the third generation (3G) network of Telkom Mobile, the cellphone services unit owned by Telkom SA. “This (network) is core to Telkom Mobile from a network infrastructure and operations point of view and also commercially.”

Telkom Mobile is key to Telkom’s strategy of fixed-mobile convergence, especially for the Telkom Business unit, which services enterprises and corporate customers. Fixed-mobile convergence is an industry term for the seamless inter-operability and connection between cellphone and fixed-line infrastructure.

“However, it is unlikely that many of Telkom Business’s fixed-line customers have adopted Telkom Mobile services as yet, so the ‘convergence’ mantra is more of a future positioning statement,” Neilson said.

In November last year, chief executive Sipho Maseko said Telkom would “de-risk” Telkom Mobile, which was launched as 8.ta in 2010 and has been capital intensive.

Neilson said Telkom had invested about R2 billion in the network, which was less than five years old. The bilateral roaming agreement would allow MTN to roam on Telkom towers, which were in the metro areas, he added.

Telkom shares rose as much as 5 percent before closing 1.4 percent up at R32.63.