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MTN Said to Be in Talks With Telkom to Share Infrastructure

A Pedestrian Checks his Mobile Handset Outside MTN Headquarters
MTN, based in Johannesburg, is the second-biggest provider of mobile phone services to South Africans, lagging behind Vodacom Group Ltd. Photographer: Nadine Hutton/Bloomberg

Dec. 12 (Bloomberg) -- MTN Group Ltd., Africa’s biggest wireless operator, is in talks with Telkom SA SOC Ltd. about an infrastructure sharing arrangement for the two companies’ mobile units, according to two people familiar with the matter.

The discussions between the South African companies could lead to a reduction in the reliance Telkom, which operates the continent’s biggest fixed line service, has on its mobile division, according to the people, who asked not to be identified because the talks are private.

Telkom, the Pretoria-based company in which the South African government owns a 40 percent stake, is “in discussions with parties” on a possible mobile deal, Chief Executive Officer Sipho Maseko said at the company’s first-half earnings presentation on Nov. 18.

“There are discussions with various parties regarding Telkom Mobile,” spokesman Pynee Chetty said in an e-mailed statement. Nik Kershaw, an MTN spokesman, declined to comment.

MTN, based in Johannesburg, is the second-biggest provider of mobile phone services to South Africans, lagging behind Vodacom Group Ltd. It has more customers in total than Vodacom, including other countries that it operates in.

Telkom paid 1.1 billion rand ($110 million) to other mobile network operators in the six months through September compared with 1.48 billion rand a year earlier, according the Nov. 18 earnings statement.

The phone company shares fell as much as 4.1 percent and were 0.7 percent lower at 27.31 rand by the close of trading in Johannesburg.

Stock Recovered

“I think that maybe Telkom started out the day responding to the overall market weakness and then when the report about MTN and Telkom being in talks aired, the stock recovered,” BPI Capital Africa analyst Kate Turner-Smith said by e-mail today.

Telkom had held earlier talks with Vodacom about sharing infrastructure, one of the people said.

Telkom Mobile active subscribers increased 6.9 percent to 1.6 million in the half year through September, the company said on Nov. 18. MTN had 203.8 million customers in 22 countries at the end of that month.

To contact the reporter on this story: Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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