Telkom SA Ltd. (TKG.JO), 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, or CDMA, business. It has received several expressions of interest that will be evaluated over the next quarter, it said.
“It is essential to stabilize the business, which we are doing through exiting the CDMA business in Nigeria and focusing [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,” he 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. (VOD.JO), 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. September’s retirement from the company was announced in June.