Vodacom Is Said to Discuss Network-Sharing Deal With Telkom

(Bloomberg) -- Vodacom Group Ltd. is negotiating a South African wireless network-sharing deal with fixed-line operator Telkom SA SOC Ltd. as a replacement for former partner Cell C Pty Ltd., according to people familiar with the matter.

The unit of Vodafone Group Plc lost about a 1 billion rand ($70.7 million) of annual revenue when Cell C jumped ship to fierce rival MTN Group Ltd. earlier this year, said the people, who asked not to be identified as the talks aren’t public. Bringing in Telkom, South Africa’s fourth-largest mobile-phone company, would make up at least some of the shortfall, they said.

Vodacom and Telkom declined to comment.

Vodacom and MTN are the country’s two biggest mobile-phone carriers with about 43 million and 30 million customers respectively. That’s more than the total population, meaning some people have more than one wireless contract. To squeeze extra revenue, both companies are seeking to add services or partnerships - taking advantage of demand for their 4G spectrum from smaller rivals.

For its part, Pretoria-based Telkom, almost 40 percent owned by the South African government, is seeking ways to add scale and compete more effectively with its three larger rivals. The majority of the business is made up of fixed-line services.

Cell C has 16 million subscribers and Telkom 5.2 million.

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Bowker, Kim Robert McLaughlin

©2018 Bloomberg L.P.