Telkom eyes stake in Portugal Telecom?

Telkom eyes stake in Portugal Telecom

Telkom may make a bid to expand its footprint into several African states in one large leap, by teaming up with potential bidders for Portugal’s biggest telephone group, Portugal Telecom.

Telkom CEO Papi Molotsane was in Lisbon last week, and was in talks with telecoms company AR Telecom about making a joint bid for Portugal Telecom, according to media reports in Portugal.

Telkom spokeswoman Lulu Letlape declined to give further details, but said: “We’re looking at growing, and this is one of the many opportunities that we’ve been approached about.” Telkom would be interested in Portugal Telecom for its operations in several African countries, including a 25% stake in Angola’s Unitel and a 32% holding in Morocco’s Medi Telecom.

Portugal Telecom also has operations in Democratic Republic of Congo, and in Mozambique, Guinea Bissau, Kenya, Sao Tome and Cape Verde.

Telkom wants to expand across Africa, and has cited Angola, Botswana, Kenya, Nigeria and Congo as the most attractive targets. Last year it bid for a 51% of Nigeria’s fixed and cellular operator Nitel, but pulled out because of a lack of transparency over Nitel’s debts.

“There are very few greenfield licences available, so the only way for Telkom to expand into Africa is through acquisitions. Angola is an area that Telkom is interested in,” said Gavin Joubert of Coronation Fund Managers.

“There is a chance that Telkom will want to buy the African assets of Portugal Telecom,” said Claude van Cuyck of Sanlam Investment Management. “If there is any logic in such a transaction, it will be the focus on Africa.”

Shares in Telkom were trading 1,4% down at R150,80 yesterday, giving it a market value of R84bn. Portugal Telecom has a market capitalisation of $11,2bn.

Telkom and AR Telecom could launch a joint bid against another Portuguese operator, Sonae, which made a $10,7bn offer for Portugal Telecom last month. Portugal Telecom rejected Sonae’s “hostile bid” on the grounds that it was too low. reports that since Sonae was rebuffed, one of the country’s leading banks, Banco Espirito Santo, has been preparing a counter bid. The bank is Portugal Telecom’s second-biggest shareholder.

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