Johannesburg - Fixed-line operator Telkom [JSE:TKG] Telkom will sell its struggling Nigerian unit for around $10m (R6.86m), exiting the troubled business for a fraction of what it paid.
Telkom said on Tuesday it would sell the mobile operator, Multi-Links, to a unit of Helios Towers Nigeria, the company with which it had been locked in a legal dispute.
Telkom originally paid $410m for Multi-Links and invested heavily in it after that. Telkom said in April it would sell part of Multi-Links to Nigeria's Visafone Communications for $52m, but that sale was blocked by the legal dispute with Helios.
"At least they are selling it for something," said David Lerche, an analyst at Avior Research. "If nothing else, it will free up management's time to concentrate on the rest of the group."
Telkom has been pushing to exit Multi-Links to focus on its new mobile operation at home, where it faces stiff competition from heavyweights such as Vodacom Group [JSE:VOD] and MTN Group [JSE:MTN].
Multi-Links is one of just a few CDMA operators in a market dominated by the rival GSM standard.
Telkom said in a statement it will continue operational funding to Multi-Links to enable the completion of the deal.
Telkom also said it would receive a portion of any upside above a certain threshold in the event Helios sells Multi-Links or it assets before three years.
Helios, which is backed by private equity firm Helios Investment Partners and South Africa's Shanduka Group, had sued Telkom for about $250m, claiming it had walked away from a 10-year rental agreement after just three years.
Telkom had argued the contracts were not valid, but the Lagos High Court ruled they were.
Telkom said this month it had cut off funding for Multi-Links after losing the Nigerian court case.