Telecommunications group Telkom and South Africa’s second-largest mobile operator MTN on Friday entered into a heads of agreement, the conclusion of which would allow the duo to roam on each other’s network and enable Telkom to derisk its mobile unit.

It would also enable Telkom and MTN to access lower-cost, increased voice and data capacity, improved voice quality and faster data speed.

The agreement was a step forward in concluding network management services and reciprocal roaming agreements, which would see MTN take over financial and operational responsibility for the roll-out and operation of Telkom’s radio access network (RAN).

“This is not a mobile virtual network operator, service provider or reseller relationship; it is a groundbreaking means to outsource the operation of our RAN for scale and efficiency, while retaining and enhancing our competitive differentiation and flexibility,” Telkom CEO Sipho Maseko assured.

The conclusion of an agreement would boost Telkom Mobile’s mobile coverage, while reducing operating costs and capital expenditure (capex) significantly.

Telkom had explored options of removing uncertainty in the mobile business and previously indicated that talks were under way with various undisclosed parties to develop a solution for the mobile unit, which continued to register losses.

As the mobile business continued to face the challenge of gaining market share in a highly competitive market, Telkom planned to curtail future operational and capex.

“We will be able to provide our customers with effective access to the latest state-of-the-art national voice, second-generation, third-generation and long-term evolution networks without having to incur the significant capital expenditure ordinarily required to achieve such national coverage,” Maseko noted.

“Telkom will continue to define and manage its own mobile products and services and market itself under the Telkom brand. The company’s channels and distribution network, client service infrastructure and billing channels will be unaffected by this agreement,” he explained.

Telkom will maintain and evolve its mobile core network and systems and continue providing differentiated products and services to the market.

The proposed transaction is subject to the conclusion by the parties of various binding commercial agreements to give effect to the proposed transaction.