Picture: Leon Nicholas.

Johannesburg - Telkom has signed over its responsibility for the finances and operation of its telecoms network to MTN South Africa. The parties have entered into heads of agreement that also paves the way for them to roam on each others networks, according to Telkom on Friday.

Sipho Maseko, Telkom’s chief executive, said his company had explored various options in recent months. “The conclusion of an agreement will allow us to expand our mobile coverage and to reduce our operating costs and capital expenditure significantly.”

Telkom customers would have access to state of the art national voice, second generation (2G), 3G and long-term evolution networks without the company having to incur significant capital expenditure that is normally required for such national coverage, according to Maseko.

He added: “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.”

Telkom’s competitiveness and its capabilities to compete at wholesale and retails levels will also be improved.

On the other hand, it will remain business as usual for Telkom’s product and services division, which would continue offering a converged product set between the company’s cellphone and fixed line business under the Telkom brand.

Telkom’s channels and distribution network, client service infrastructure and billing channels will remain unaffected by the agreement. The firm would maintain and evolve its mobile core network and systems, it said.

“It is a ground breaking means to outsource the operation… for scale and efficiency, while retaining and enhancing our competitive differentiation and flexibility,” Maseko said.

The proposed transaction will take effect on the conclusion of various binding commercial agreements.

Telkom gained 2.11 percent to close at R33.32 on Friday.

Business Report