Telkom South Africa Says Talks with Vodafone, MTN are Ongoing

JOHANNESBURG -(Dow Jones)- Telkom SA, Africa's largest fixed-line telephone operator, Thursday said discussions with mobile network operators MTN Group and Vodafone Group are ongoing.

The South African company has been conducting a review of its mobile phone business, Vodacom, which it jointly owns with Britain's Vodafone.

Analysts have speculated Telkom is considering selling some or all of its share in Vodacom and could enter a partnership with MTN, the largest mobile operator in sub-Saharan Africa.

The companies Sept. 3 confirmed they were in talks, but declined to offer further details.

MTN in a separate statement to the Johannesburg securities exchange confirmed that talks concerning "certain assets" of Telkom were continuing.

Telkom offers fixed-line voice and data services in South Africa and has been looking for growth in Internet opportunities on the continent as it has been hit with intensifying competition from mobile operators in its home market.

It was earlier this year blocked by antitrust authorities from buying one of South Africa's largest information technology companies, Business Connexion Group. It also will face fixed-line competition in South Africa when Indian conglomerate Tata's nascent operator Neotel launches across the country.

At 1151 GMT, shares in Telkom were trading up ZAR4.50, or 2.6%, at ZAR178.50, outpacing an advance in the broader Johannesburg market.

Vodafone Chief Executive Arun Sarin has previously said the world's largest mobile phone firm would be interested in increasing its interest in Vodacom. However, he has been quoted as saying it isn't looking to buy Telkom's full 50% share.

Vodacom, which is the largest mobile company in South Africa and also operates in Tanzania, Lesotho, Mozambique and the Democratic Republic of Congo, had a subscriber base of 32.4 million customers at June 30.

-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 11th October 2007