Telkom SA welcomes minister's call to help fund national broadband

Telkom, the partially state-owned South African telecoms service provider, welcomed a call to arms by telecoms minister Siyabonga Cwele regarding funding for a national broadband network.

The minister on Friday told Bloomberg that he would press Telkom to help fund the rollout of a national broadband network, which the news agency reported could cost up to ZAR98 billion (€7.3 billion/$8.4 billion) to construct. While the government plans to fund some of the deployment by auctioning mobile frequencies and through direct funding, Telkom's stable balance sheet means it is capable of providing some of the monies, the minister told Bloomberg.

Telkom, which provides fixed and mobile telephony and Internet services, is around 40 per cent owned by the South African government. The operator's earnings before interest, depreciation and amortisation (EBITDA) grew by 14.3 per cent year-on-year in the six months to end-September 2014, hitting ZAR4.1 billion as revenues fell a marginal 0.5 per cent to ZAR15.9 billion.

A Telkom spokeswoman told Bloomberg that the company was pleased to have been selected at the "champion" of the country's national broadband network, and that the move would boost collaboration between the government and telecoms industry in the market.

The telecom's minister's call for cash came a day after Telkom clarified that no agreement has yet been reached with mobile operator MTN regarding an extension of an existing roaming deal between the pair, following reports that MTN is mulling the acquisition of a majority stake in Telkom.

In a shareholder statement, Telkom noted that the companies are discussing whether to expand the scope of their current agreement to include "bilateral roaming and outsourcing of the operation of Telkom's radio access network".

Telkom's statement added that it and MTN will "update shareholders as soon as they receive the appropriate legal and regulatory approvals."

For more:
- see this Bloomberg report
- view Telkom's shareholder statement
- read this separate Bloomberg article on MTN

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