Vo­da­com, Telkom sign new deal

• Multi­bil­lion-rand in­fra­struc­ture and roam­ing deal will bring 4G net­work to some sub­scribers for the first time

Business Day - - FRONT PAGE - Larry Claasen claasenl@busi­nesslive.co.za

Vo­da­com and Telkom have signed a multi-bil­lion rand in­fra­struc­ture leas­ing and roam­ing deal that will im­prove the fixed-line op­er­a­tor’s cov­er­age and give it ac­cess to a faster in­ter­net net­work. From June 2019, Telkom will use Vo­da­com’s net­work to pro­vide voice calls and faster in­ter­net ser­vices to its sub­scribers.

Vo­da­com and Telkom have signed a multi­bil­lion-rand in­fra­struc­ture leas­ing and roam­ing deal that will im­prove the fixed-line op­er­a­tor’s cov­er­age and give it ac­cess to a faster in­ter­net net­work.

From June 2019 Telkom will use Vo­da­com’s net­work to pro­vide voice calls and faster in­ter­net ser­vices to its sub­scribers. Telkom’s sub­scribers in some ar­eas will for the first time have ac­cess to a 4G net­work through this deal. Since the in­cep­tion of its mo­bile ser­vice nine years ago, Telkom roamed on ri­val MTN’s net­work for its 2G and 3G ser­vices.

Un­der the terms of the new agree­ment, Telkom cus­tomers will roam on Vo­da­com’s 2G, 3G and 4G net­works. This, ac­cord­ing to Vo­da­com, means that the chances of a dropped call will be re­duced be­cause Telkom’s cus­tomers will seam­lessly move be­tween net­works.

The an­nounce­ment comes six months af­ter Cell C signed a sim­i­lar agree­ment with MTN, af­ter be­ing with Vo­da­com since in­cep­tion in 2001.

Bring­ing Telkom onto its net­work will be a boost for Vo­da­com, as it will off­set the loss of in­come from Cell C’s move to MTN, said Africa Anal­y­sis MD An­dre Wills.

Wills said the deal is a good one for the coun­try’s largest mo­bile op­er­a­tors be­cause it can use the earn­ings from this deal to im­prove its own net­work. Vo­da­com is com­mit­ted to a high-speed 5G net­work, which can cost up to four times more than a 4G net­work to set up.

No fig­ures were dis­closed but the deal was de­scribed as a “long-term, multi­bil­lion-rand agree­ment”. The ben­e­fits for Telkom are more mixed. Telkom only has 5-mil­lion mo­bile sub­scribers com­pared to Vo­da­com’s 41.6-mil­lion, and though it would be bet­ter for it to build its own net­work, do­ing so would put a strain on its re­sources.

It had to weigh up the cost of set­ting up its own net­work against putting re­sources into grow­ing its sub­scriber base. “It’s a trade-off,” Wills said. Telkom CEO Sipho Maseko said the deal will im­prove the cus­tomer ex­pe­ri­ence on its net­work and lead to more ef­fi­cient cap­i­tal and op­er­a­tional ex­pen­di­ture for the net­work op­er­a­tor.

“It com­ple­ments Telkom’s net­work roll-out pro­gramme as Telkom re­mains com­mit­ted to ex­pand­ing its net­work. The agree­ment en­ables quicker site ac­qui­si­tion in the medi­umterm,” he said.

Vo­da­com Group CEO Shameel Joosub said “apart from the com­mer­cial ben­e­fit, this part­ner­ship be­tween the coun­try’s fastest-grow­ing net­works will also re­sult in re­duced net­work de­ploy­ment costs for Telkom and cost sav­ings for Vo­da­com, ul­ti­mately con­tribut­ing to the re­duc­tion of data prices in South Africa”.

For Maseko, the trade-off is worth it. “Seam­less han­dover and 4G mo­bile tech­nol­ogy are new ad­di­tions to Telkom’s roam­ing agree­ment, which will im­prove the cus­tomer ex­pe­ri­ence. The in­fra­struc­ture shar­ing agree­ment will al­low Telkom more ef­fi­cient cap­i­tal and op­er­a­tional ex­pen­di­ture.”

THE DEAL WILL IM­PROVE THE CUS­TOMER EX­PE­RI­ENCE ON ITS NET­WORK AND LEAD TO MORE EF­FI­CIENT EX­PEN­DI­TURE

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