South African fixed-line operator Telkom has chosen Chinese vendor Huawei as supplier for its emerging mobile aspirations. The operator currently owns 50 percent of regional mobile operator Vodacom, a deal which has to date barred it from offering its own mobile services in the country. However, earlier this month Telkom confirmed that Vodafone – owner of the other 50 percent of Vodacom – has offered to buy a further 12.5 percent stake in Vodacom for 18.75 billion rand (US$2.47 billion), with the offer reportedly conditional on Telkom unbundling or spinning-off its remaining 37.5 percent stake to its existing shareholders. At the time of the proposal, Telkom CEO Reuben September said the disposal of the Vodacom stake would enable Telkom to re-enter the country’s mobile market. In addition, he stated that the operator will over the next few years be “aggressively funding the expansion of our African units and our networks in South Africa.” Telkom also owns operators in Nigeria and Kenya.

Reports suggest today’s deal with Huawei is an indication that the deal with Vodafone is moving forward. A TeleGeography report, citing news site ITWeb, states that the Huawei contract will initially focus on fixed-wireless services, but will also enable Telkom to launch 3G WCDMA services in the future. The value of the deal was not disclosed, although Huawei said the planned network will have capacity for 100,000 connections and deployment has already begun. The first fixed-wireless users are expected to be connected in September in the province of Gauteng. Telkom will reportedly invest 1.7 billion rand (US$213 million) in the network over a three-year period. If Telkom eventually moves into the South African mobile market, it will face competition from existing 3G mobile operators Cell C, MTN and Vodacom. Market-leader Vodacom introduced the country’s first 3G service in December 2004. However, according to Wireless Intelligence, 3G services only make up approximately 3.5 percent of total mobile connections in the country.