Both operators claim they are pulling out from the two countries because the markets are no longer viable for communication businesses. Like Telecom Namibia, Telkom South Africa wants to stabilize the local operations first before embarking on new investment opportunities across Africa.
Telkom South Africa entered the Nigerian market in 2007 after buying a 75 percent, 1.96 billion rand (US$280 million) stake in Multi-Links Communications, which provides services including fixed wires, unified access service and international data services in Nigeria. In January 2009, the company bought the remainder of Multi-Links.
Telkom South Africa hoped the entry of the company into the Nigerian market would provide a stepping stone for the company's investment in other West African countries, which have financially struggling operators. The pullout from Nigeria means that the company has also suspended its planned investment in any West African country.
Due to financial stress, Telkom South Africa has further closed down Telkom Management Services, an investment venture that was created by the company to pioneer investments into Swaziland, Lesotho, Democratic Republic of Congo, Zimbabwe, Malawi, Uganda and Ghana.
However, the company's CEO, Jeffrey Hedberg, said this week that the pulling out of the Nigerian market does not mean that the company would ignore its focus on repositioning its African assets. At a later stage, Hedberg said, the company would look at new opportunities for investments in the region.
The African telecom market is currently undergoing transformation following investments in the telecom sector by international telecom companies that have brought stiff competition in the sector, which is negatively affecting profits of less innovative African operators that are not well-funded.
Telecom Namibia is, meanwhile, pulling out of Angolan fixed operator Mundo Startel, ending the Namibian government's bid to expand the operations of the state-owned telecom company into regional markets.
"Prohibitive restrictions, high taxations and lack of locally sourced, skilled workers raise the cost of running the communication businesses for African operators expanding into other countries," Collins Chinyama, president of Computer Society of Zambia, said in an interview.
African telecom analysts believe that other major operators are also feeling the strain and may divest regional assets to focus on their local markets.
Telecom Namibia, the country's terrestrial telephone operator, invested about N$100 million (US$14 million) for a 48 percent stake in Mundo Startel as part of the company's entry into African telecom markets. The partnership between Namibia Telecom and Mundo Startel was expected to result in the deployment of 100,000 wireless lines providing voice and high-speed data services throughout Angola's capital, Luanda, before extending the service throughout the country.
However, Telecom Namibia Managing Director Frans Ndoroma said the company is ditching the Angolan market in order to pull all its resources and efforts and concentrate on the domestic market.
Telecom Namibia also has a 12.5 percent stake in Neotel, South Africa's second fixed-line operator. The company has not, however, said whether it will also pull out its investment in Neotel.