MTN and Neotel were two weeks away from signing an agreement with Vodacom that would save the two firms about R200 million each in building a fibre-optic network in South Africa.

This according to Tim Lowry, managing director of MTN South Africa.

“We are going through the last steps” of getting Vodacom into the agreement, Lowry said in an interview last week, adding that savings for Vodacom could be as much as R500 million.

MTN and Neotel signed a co-operation agreement in January 2009 to share the costs of building the 5 000km network.

The R2 billion network will replace the infrastructure that cellphone companies now lease from Telkom.

MTN was also seeking to deepen its relationship with Vodacom and find new areas for infrastructure sharing.

This could include base stations, towers and antennae. The cellphone service provider already shared about 800 sites with Vodacom, Lowry said.

Dot Field, a spokeswoman for Vodacom, confirmed an agreement would be signed shortly. “Our board has approved this,” she said.

The companies were also considering cutting the number of sites used. One of the main tasks for the year ahead was “talking about infrastructure sharing and spending,” Lowry said.

This would not be exclusively with Vodacom or Neotel. MTN was talking to “all service providers, he explained.

Neotel is 56 percent owned by India’s Tata Communications.

Work on building the network would begin next week, Lowry said, adding that the first phase would cover 592km and was scheduled for completion by the middle of 2010.

MTN aimed to complete the entire project within two years.

MTN Network Services and Verizon South Africa, the internet and network services provider bought by MTN this year, would be integrated by about June, Lowry said.

By the end of 2009 MTN wanted to be able to offer “converged products”, such as data and fixed mobile services, to its corporate clients.

The new, larger unit had combined revenue of R1 billion annually, Lowry said.

“We’re going to double the size of that business in the next three to four years.” – Bloomberg

PUBLICATION: Businesss Report
AUTHOR: Nicky Smith
DATED: 17th March 2009