South Africa's Telkom, MTN in talks over network sharing

JOHANNESBURG, March 6 Thu Mar 6, 2014 9:45am EST

JOHANNESBURG, March 6 (Reuters) - South African fixed-line phone operator Telkom SA SOC Ltd said on Thursday it is in talks with MTN Group about sharing each others networks, a move that could save both firms money.

Telkom, under Chief Executive Sipho Maseko, is in the middle of a turnaround plan that include selling underperforming assets, slashing jobs and finding cost-effective ways to run the money-losing mobile phone unit.

Using MTN's extensive wireless network is expected to save Telkom money that would have been used to build its own infrastructure for its recently formed mobile phone unit.

Telkom launched a mobile unit in 2011 in a bid to offset a decline in revenues from traditional telephony but the business is struggling to win a share of the market dominated by MTN and Vodacom Group.

Shares in the company rose as much as 5 percent shortly after the news before settling at 2.1 percent higher at 32.87 rand by 1320 GMT. MTN gained 1.6 percent to 202.70 rand.

For MTN, the deal would allow it to piggyback on Telkom's vast high speed optic-fibre fixed-line network to cope with surging data traffic as more and more of its customers switch to smartphones and tablets.

MTN, Africa biggest wireless phones operator, suffered a drop revenue from its home market as it reported full-year results this week, citing tough competition.

Telkom did not say how much it, or MTN, could save if the talks were successful. (Reporting by Tiisetso Motsoeneng Editing by Jeremy Gaunt)

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