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In ANYTHING on December 13, 2010 at 10:03 am

TELKOM SOUTH AFRICA SEVERES TIE WITH STARCOMMS NIGERIA

Telkom SA Ltd., South Africa’s dominant fixed-line phone company, said Monday it will exit its struggling mobile operation in Nigeria and refocus its African Internet services unit on business customers as it continues to look for ways to recover growth.

Telkom said management has been told by the board to review options to exit the code-division-multiple-access business and evaluate several expressions of interest that have been received. The exit will cost it between $100 million and $180 million, excluding any proceeds from a sale, it said.

“It is essential to stabilize the business, which we are doing through exiting the CDMA business in Nigeria and focusing [our Internet services business] iWayAfrica mainly on corporate customers,” said Jeffrey Hedberg, who was appointed acting chief executive in July, one year after he was named CEO of Nigerian mobile operation Multi-Links Telecommunications Ltd.

“This allows us to allocate capital to those areas that will drive revenue growth and promote cost efficiencies,” Mr. Hedberg said.

Telkom bought a 75% stake in Multi-Links for $280 million in 2007 in an effort to expand beyond its home market and gain a foothold in Nigeria, the continent’s most populous country. It acquired the remainder for $130 million at the beginning of 2009 before the company exited its 50% stake in Vodacom Group Ltd., the South African mobile operator that had for years been Telkom’s primary earnings driver.

Multi-Links proved to be a gamble on the wrong technology, former CEO Reubens September admitted earlier this year, saying Telkom had bet on the potential in Africa for CDMA, the rival technology to the more popular global system for mobile communications, or GSM. Mr. September’s retirement from the company was announced in June.

Multi-Links continues to bleed the company year after year and the pressure is on for Telkom to dispose of the asset, said Spiwe Chireka, an analyst at business consultancy Frost & Sullivan.

Telkom’s net profit slumped to 1.01 billion rand ($144.9 million) in the six months through September, from 39.66 billion rand a year earlier as a profit from the sale of the stake in Vodacom wasn’t repeated and it again impaired the value of Multi-Links. Revenue for the period fell 6.5% to 17.97 billion rand from 19.23 billion rand, the Pretoria-based company said.

Telkom in mid-October launched 8ta, its own mobile service in South Africa, and a month later had signed up 186,033 customers. The business enters a market dominated by Vodacom, which is now majority-owned by the U.K.’s Vodafone Group PLC and has about 23.9 million subscribers in South Africa. MTN Group Ltd., Africa’s largest mobile operator, has roughly 17.8 million customers in the country.

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  1. I know that “none of the good deeds go unpunished” but of course in the heat of been a “Good Samaritan” i gave my car to a friend to drive until her car getting fixed in my garage. It lasted about a week and a half and she wrecked the car. Damage to other vehicle = none, according to her. My car is hit in the front radiator leaking and the hood and one of the headlights is smashed. She got a verbal estimate from some guy to fix it for a grand,(she is willing to pay me) which I doubt is enough because I am positive she overheated the engine on multiple occasions after the accident because she have told me she kept driving it until smoke came out of the engine compartment few times then she called me. I suspect that engine is a toast – the car is 95 Escort wgn with 200k. But I really babied that car and it was running almost (considering the age and miles) flawlessly.
    Her insurance company said they will only process the claim as a secondary insurer and my provider will have to be a primary because the insurance follows the car not the driver – their exact words. I don’t even want to call my insurance and ask because i suspect my rates will go way up and I have two teenagers in the house.
    Any suggestions?
    Thanks!

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