World Dialogue on Regulation

Telkom South Africa and its mobile subsidiary Vodacom will bid for Nigeria’s state-owned telecom provider Nitel. Nitel owns mobile operator M-Tel.

"There are great opportunities in Nigeria and we are partnering with Vodacom to bid for Nitel," Mike Mlengana, a Telkom vice president said.

Gaining a foothold in Nigeria is a high priority for Telkom and Vodacom's African expansion plans and the two companies hope to be in operation in Nigeria next year, Mlengana added.

"It is good for Nigeria and Nitel that these big operators are interested in Nitel. I can't say much on the matter at the moment because the bid process is still on…Of course, we are ready to work with them if they win the bid." said Nitel Chief Executive Rein Zwolsman.

Vodacom pulled out of Nigeria earlier this year over graft allegations at its partner Vee Networks, but since then, it has said Nigeria is important and that it is looking at ways of returning. Vodacom’s withdrawal came shortly after signing a five-year management contract with Vee Networks and re-naming the company Vodacom Nigeria. There were allegations of questionable commission payments by Vee Networks to three of Vee's directors.

Industry sources say Vodacom met Vee Networks last week, and a senior source close to the Nigerian company said last week Vodacom was seeking to reopen talks that could result in it returning to Vee Networks. Mlengana said that before clinching the Nitel deal, Nigeria wants more clarity on Vodacom's plans regarding Vee Networks.

Vodacom is South Africa's mobile market leader but it has lagged behind MTN in total revenues, as MTN grows rapidly due in large part to the success of MTN Nigeria. Vodacom is 50% owned by Telkom and 35% owned by Vodafone.

Telkom, faced with competition when the South African market opens to fixed-line competitors next year, is eager to expand outside of South Africa's relatively mature telecommunications market.

"Our plans are to expand into Africa but we have to look at the viability of projects and the risk in those countries."

Intelecon Research & Consultancy Ltd. 08/12/2004

Source: Reuters