Telkom SA and Vodacom battle for African telecom market

NAIROBI, KENYA – Barely a week after Telkom South Africa shed off 15 per cent shareholding in Vodacom Group, the fixed-line operator has entered into a US$63 million deal with Naspers to purchase MWEB Africa.

The transaction furthers the company’s strategic goal of becoming a Pan-African integrated service provider, according to Telkom CEO Reuben September.

“Expanding beyond the borders of South Africa provides Telkom with an opportunity to become less dependent on domestic revenue streams,” he said.

Telkom’s appetite for African expansion was the reason behind its uneasy relationship with its co-owner in Vodacom Group, Vodafone International. The acquisition signals the onset of a battle for supremacy between Telkom and Vodacom in the provision of converged services.

Telkom’s deal stipulates that it will acquire 75 percent of MWEB Namibia Limited and 100 per cent of MWEB Africa, including satellite service provider AFSAT Communications. MWEB South Africa, however, was pulled out of the deal because of the current unfavorable global economic climate.

“This acquisition, together with Telkom’s investment in Africa Online, is expected to increase the value proposition of our product and service offerings to all customer segments in sub-Saharan Africa,” September said. “Telkom’s position as partner of choice for connectivity and related services in Africa is expected to be strengthened.”

MWEB Africa is based in Mauritius with operations in Kenya, Namibia, Nigeria, Tanzania, Uganda and Zimbabwe; an agency arrangement in Botswana; and distributors in 26 sub-Saharan African countries.