Telkom deal could scramble cellphone industry
SBC Communications, the Texas-based telecommunications giant, could be forced to sell its 15% stake in cellular phone company MTN if it wins the bidding in Telkom's partial privatisation.
A successful offer for the 20%-30% in Telkom that is up for sale would give SBC (formerly Southwestern Bell), control over MTN rival Vodacom. Telkom holds 50% of Vodacom.
Three main contenders are still in the running for Telkom: A consortium comprising SBC and Malaysia Telekom, Deutsche Telekom and France TÚlÚcom.
The SBC/Malaysia Telekom alliance is said to be close to finalisation and many analysts consider them the frontrunners in the bidding. It is still not clear whether the two European operators will act in concert.
SBC SA head Jim Myers said this week he had not yet received any proposals from the SA government regarding SBC's MTN holding. "We are prepared to discuss any proposal the government puts forward, but are waiting for its policies."
A spokesman for the Department of Posts and Telecommunications said the implications of SBC's cross-holding would be considered once a decision on Telkom's equity partner had been made. It was likely that SBC, if it were successful, would have to sell the MTN stake to avoid a conflict of interest.
Competition Board chairman Pierre Brooks confirmed that the cross-holding would raise competition policy concerns.
SBC paid $90-million for its 15% stake in MTN last year. It also has the right to appoint the group's chief executive, a right it invoked last year by nominating Bob Chaphe to the post.
MTN said in a statement that it questioned the possible condition on SBC to sell its stake. "Why should divestment by Telkom in Vodacom also not be a prerequisite?" It added any decision on management at MTN would be made by the board and Chaphe.
The government will announce the winning bid in March next year and is hoping to raise over R6-billion from the sale.
Deutsche Telekom was previously considered the frontrunner in the race, but its current Dm15-billion privatisation has forced it to cool down international expansion plans. The funds raised will be used to reduce its Dm107-billion debt.
Chairman Ron Sommer said recently that DT was interested in the Telkom stake, but the offer would have to be approved by its board and would have to offer value to shareholders.
DT, France TÚlÚcom and US long-distance telephone group Sprint are part of the Global One telecommunications alliance. The parties are contractually not obliged to bid under Global One's umbrella.