Telkom MTN mating dance awaits consummation

March 10th, 2014, Published in Articles: EE Publishers, Articles: EngineerIT

by Hans van de Groenendaal, features editor, EE Publishers

It is amazing how fast things can change in the mobile space – one day acrimonious and unseemly public disputes between hostile competitors, a week later overtures to get into bed together!

Telkom CEO Sipho Maseko

Telkom CEO Sipho Maseko

After last week’s spat where Telkom accused MTN and Vodacom of holding the country back and standing in the way of a more economical cell phone tariff structure by taking ICASA to court over the new proposed call termination rates, Telkom and MTN are now courting one another.

The heads of agreement (HoA) signed on Friday 7 March 2014 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 roll-out 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.

Telkom will be able to provide its 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 costs 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.

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 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.

“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.

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

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