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Telkom 'mulls' selling phone towers

Johannesburg - Phone company Telkom is seeking to cut costs on a struggling mobile service and is considering a sale of a network of telephone towers in the country, according to people with knowledge of the matter.

As a result, the company's shares have risen to their highest in more than seven years.

A potential sale may fetch $500m to $1bn, with bids due as early as next week, said one of the people, who asked not to be identified as the information is private. Telkom is working with consulting firm Accenture on the sale, which may attract tower operators such as IHS Holding of Nigeria and Helios Towers Africa, the people said. No final decision has been made and talks may still falter, they said.

Carriers in emerging markets, which include the Middle East and Africa, are offloading towers. They cost more to run in such regions than in other parts of the world because of the need for back-up generators and batteries to guard against power failures.

Kuwait’s largest wireless carrier, known as Zain, is working with Citigroup on the possible sale of towers in two Gulf countries, people familiar with the matter said last month.

Telkom, Africa’s largest fixed-line operator, started a mobile service in 2010 and remains the fourth-biggest wireless operator in South Africa. The Pretoria-based company is cutting jobs to reduce costs and revive sales growth as consumers switch to data-enabled smartphones and tablets from landlines.

Seven-Year High

The phone company’s shares rose as much as 5.7% to R77.95, the biggest intraday gain since November 18 and the highest price since November 2007 and closed 1.7% higher in Johannesburg. Telkom was the second-best performer on South Africa’s bourse last year with a 150% gain.

Telkom is reviewing all its properties, assets and infrastructure and considering a wide range of options, the company said in an e-mailed statement. Representatives for Accenture and Helios declined to comment. A representative for IHS didn’t return calls and e-mails seeking comment.

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