UPDATE 2-SAfrica's Telkom sells part of Multi-Links

Fri Apr 1, 2011 3:27pm BST

Quotes

   

* Visafone to pay an enterprise value of $52 mln

* Telkom retains fibre network, fixed-line unit in Nigeria * Shares up 2.24 pct

(Adds analyst comments, background)

By Gugulakhe Lourie

JOHANNESBURG, April 1 (Reuters) - Africa's largest telephone group Telkom (TKGJ.J) is selling part of its loss-making Multi-Links operation in Nigeria for $52 million to Visafone Communications, sending its shares higher.

South Africa-based Telkom paid $330 million three years ago for the Nigerian business which posted an operating loss of 262 million rand ($37.42 million) in the six months to end-September.

Telkom said on Friday it will retain Multi-Links' fibre network and fixed-line units in Nigeria.

"The prospects of (Telkom) growth are much better now that they have shed the luggage," said Dobek Pater, a telecoms analyst at Africa Analysis.

"The upside for Telkom looked more rosier and that's why the share price is reacting positively."

Shares in Telkom, valued at about 20 billion rand, rose 2.24 percent to 37.83 rand by 1420 GMT, outpacing a flat JSE Top-40 index .JTOPI.

Asked about the price paid by Visafone, Pater said: "I think overall (Telkom) are selling from a back foot position, because they are taking quite a knock in this transaction in relation to the premium they paid when buying this business."

Telkom said Visafone, established by Jim Ovia, the co-founder of Nigeria's Zenith Bank Plc (ZENITHB.LG), will pay for the mobile unit via a number of transaction steps.

The unit is one of four mobile operators using the CDMA technology platform in a market dominated by the rival GSM standard and has been struggling in recent years.

Multi-Links' CDMA business had 1.9 million users in the six months to end-September, down 8.4 percent. (Reporting by Gugulakhe Lourie; Editing by David Cowell)