Selling off its stake in Vodacom will place Telkom in a better position to address the market challenges that lie ahead.
The group opened negotiations with Vodafone earlier this month regarding the potential sale and unbundling of its stake in Vodacom.
"Telkom is facing active competition from mobile operators in the voice market and increasingly so in the data market," says Telkom CEO Reuben September. "We believe that an integrated fixed-mobile operator is better positioned to react to and take advantage of the challenges that lie ahead.
"Having an integrated fixed-mobile offering will allow Telkom to leverage our customer base, marketing, distribution and logistics channels to increase our share of voice revenue," he says.
"In addition, Internet access demands are increasingly requiring mobility. An integrated bundled offering would offer superior speeds and quality through the fixed-line, including the advantages of mobility when required by the customer.
"In the future we also anticipate that content demands will require an element of mobility although not in the short term," he adds.
"And, very importantly, we believe that having a coherent, integrated and synergistic fixed-mobile capability will greatly enhance Telkom`s ability to successfully compete for international acquisitions."
September announced that Telkom has decided to use W-CDMA technology and has appointed Huawei as its vendor to build out the fixed wireless and mobile data network.
He says W-CDMA technology will provide Telkom with the following benefits:
* Provide Telkom with a mobile data as well as fixed and a nomadic voice capability;
* As W-CDMA does have the capability of supporting full mobility, the above services can be further augmented with mobile voice should Telkom be successful in concluding its mobile strategy and no longer be bound to the current Shareholders Agreement with Vodafone; and
* Alleviate the negative impact of thefts, breakages and incidences (TBIs) on service delivery. In order to satisfy demand for services in high theft and high maintenance areas, Telkom has acquired W-CDMA to decrease exposure to the losses being incurred.
"In addition, the cost per customer should be attractive when compared to the cost of using current point to multi-point radio based systems," September adds.