Telkom to expand control

ADSL South Africa (Broadband South Africa), 8 January 2007

Telkom  is set to expand its control in sub-Saharan Africa by acquiring a controlling stake of 51% in Uganda Telecom.

A reliable source has confirmed ‘that Telkom’s negotiating party had concluded a deal to buy into Uganda Telecom’ (Telkom scoops Uganda Telecom, Mwanza, 4 January 2007). Telkom will buy its stake from a consortium called Ucom. While financial details on Telkom’s offer are sketchy at present, Ucom shareholders are apparently very impressed with Telkom’s offer. We will have to see if Telkom’s shareholders share the sentiment when more details become available.

Why would Telkom be interested in Uganda Telecom?

Well, Telkom’s shareholders are placing a lot of pressure on Telkom to grow and Uganda Telecom presents an opportunity for just that.

The deal will give Telkom access to a cellular network of almost half a million subscribers (Vodacom must be smiling) as well as a fixed-line subscriber base of over a 100 000 subscribers. Uganda Telecom will welcome the deal especially since it needs approximately R5.3bn ‘to roll out its network expansion project’ (Telkom scoops Uganda Telecom, Mwanza, 4 January 2007).

Ucom shareholders wouldn’t be smiling if Telkom offered ‘peanuts on a plate’. It is clear that cash cow Telkom still have enough cash left in its arsenal for a lot of fighting. This means that one should take it with a pinch of salt when rumours have it that they are having ‘sleepless nights over competition from Neotel’s side’.

It is also clear that the citizens of Uganda will see that development comes at a hefty price especially when Telkom is in control of affairs. It will seem that Telkom is generous at first but watch out for the ‘hand with the knife clutched in it’. One has to be positive though about the fact that they will at least see more development in the telecoms arena of their country.

ADSL South Africa(Broadband South Africa) welcomes development but will remain sceptical when players like Telkom are involved. We are not against the concept of making healthy profits but ‘robbery’ is something else altogether.