South African operator abandons sale of Nigerian CDMA firm

The sale of the Nigerian firm Multi-Links has been scrapped by the former’s owner, the South African operator Telkom, due to an ongoing legal challenge from the infrastructure provider Helios Towers. Telkom’s board has reportedly also decided to cease funding for the Nigerian firm, which was due to be sold to its direct competitor Visafone.

Last month, Telkom’s proposed sale of Multi-Links met with a severe setback when a court ruled that the unit could not be sold until its dispute with Helios Towers was settled. Telkom’s plans for the Nigerian firm’s future are not yet clear, but a sale is unlikely until the dispute is resolved.

The proposed deal with Visafone would have incurred a loss for Telkom anyway, and the operator is likely to have a hard time selling Multi-Links even if the legal challenge is overcome.  The Nigerian business uses CDMA technology rather than the market-standard GSM, and its market share stands at just 3%.

Telkom’s South African operations are also facing trouble, with the EBITDA loss for its fledgling 8ta mobile business forecast at ZAR1.1 billion (US$163 million), with revenue at ZAR81 million. The business is not expected to break even until the end of fiscal year 2013-14 following delays to both the launch of services and infrastructure rollout.

Despite this, 8ta has accumulated 1.2 million subscribers, and Telkom is confident for the operator’s future. CEO Nombulelo Moholi noted: “Following the launch of 8ta, our focus into the future will be on offering fully converged products that marry mobile voice and data services with the quality and resilience of the fixed-line services to both the enterprise and residential markets." The firm has stated that a complete portfolio of products will allow it to boost its revenue and become more competitive.

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