Vodacom, Telkom sign multibillion-rand infrastructure and roaming deal
The fixed-line operator ends its nine-year agreement with rival MTN
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 rolling out a high-speed 5G network, which cancost 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, multi-billion-rand agreement”.
The benefits for Telkom are, however, 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 medium-term,” 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.”
Wills said getting widespread coverage is key for any operator because without it, they will struggle to attract subscribers.