All of a sudden it seems everyone wants a piece of AfricaOnline - this telco gets some criticism about their ambitions.... .....although the Uganda Telecom deal provokes some interest - would Telkom SA really add value? Regards, Brian ------------------ Telkom mum on Africa move By Damaria Senne and Nicola Mawson Posted: 22 January 2007 Telkom has refused to say whether it has bid for Kenya-based pan- African Internet company Africa Online, owned by African Lakes Corporation (ALC), a London-based group. “The reports linking Telkom SA as a bidder for Africa Online are speculative and Telkom will not comment on media speculation,” says the fixed-line operator. Media reports indicate that, two weeks ago, Kenyan-based group Africa Telecoms announced plans to offer £15.50 a share in cash for all African Lakes' shares, valuing the ordinary shares held by Africa Online's parent at £4.2 million, Balancing Act reports. However, soon after the cash offer was reportedly made, ALC confirmed that it was in discussion with interested parties for the sale of the ALC group or of Africa Online separately. Other media reports indicate Telkom is one of the interested parties bidding for the shareholding of Africa Online. Strange move An analyst, who asked that his name be withheld, says a move by Telkom to bid for an Internet service provider (ISP) would be “strange”. He says he cannot understand why the fixed-line operator would buy into an ISP rather than other, more lucrative, operations such as mobile or fixed-line communications. “If Telkom does move into Africa, adding IT to a telecoms portfolio would be the way to go, but, I'm not sure that it would add any significant value to their business,” he says. Instead, the analyst argues, the addition of an ISP may subtract value from Telkom because of low penetration rates and a lack of sophisticated technology on the continent. “Telkom has far more serious issues to sort out at this stage,” he says, referring to impending competition as Neotel enters the market and Telkom's bid for Business Connexion comes before the Competition Tribunal. Back door entry BMI-TechKnowledge senior analyst Tertia Smit says buying into an ISP would be another way for Telkom to enter the African market, with the idea of establishing a presence in African countries where Africa Online has operations, before making a bid for larger players like fixed-line and mobile operators. The ISP has operations in Cote D'Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda and Zimbabwe. Telkom, however, would not discuss whether it has put such a strategy in place. The group, which has previously expressed its intention to explore investment opportunities internationally, has unsuccessfully bid on a number of telecoms companies, including Nitel in Nigeria. CEO Papi Molotsane also previously said the fixed-line operator plans to explore joint opportunities in Africa with Vodacom, of which Telkom holds 50%. Last year, Telkom confirmed its interest in buying into Ugandan Telecom.