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Vodacom is said to discuss network-sharing deal with Telkom

In partnering with Telkom, Vodacom plans to make up for some of the financial shortfall it reported when Cell C ended its partnership with the company.

Vodacom is negotiating a South African wireless network-sharing deal with fixed-line operator Telkom as a replacement for former partner Cell C, according to people familiar with the matter.

The unit of Vodafone lost about a R1 billion ($70.7 million) of annual revenue when Cell C jumped ship to fierce rival MTN earlier this year, said the people, who asked not to be identified as the talks aren’t public. Bringing in Telkom, South Africa’s fourth-largest mobile-phone company, would make up at least some of the shortfall, they said.

Vodacom and Telkom declined to comment.

Vodacom and MTN are the country’s two biggest mobile-phone carriers with about 43 million and 30 million customers respectively. That’s more than the total population, meaning some people have more than one wireless contract. To squeeze extra revenue, both companies are seeking to add services or partnerships – taking advantage of demand for their 4G spectrum from smaller rivals.

For its part, Pretoria-based Telkom, almost 40% owned by the South African government, is seeking ways to add scale and compete more effectively with its three larger rivals. The majority of the business is made up of fixed-line services.

Cell C has 16 million subscribers and Telkom 5.2 million.

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