Telecom

Telkom Considers Making A Second Bid For Cell C

Telkom is said to be considering making an offer to buy a majority share in Cell C that would lead to the amalgamation of South Africa’s third- and fourth-largest mobile-phone operators, according to individuals familiar with the matter.

The former landline monopoly in South Africa is apparently hoping to gain management control of the Johannesburg-based carrier, said the people, who requested not to be named because the plans are still private at this time.

The reliable sources said that Telkom had not yet made a final decision and the deal could still fall through.

Cell C and Telkom have thus far declined to comment on the matter.

Since July 20, the shares in Blue Label Telecom, which is the owner of 45% of Cell C, went up by an impressive 8.7%, and also traded at 4.2% higher. Telkom, on the other hand, fell 4.3%.

A joint venture between Cell C and Telkom’s mobile-phone division would ultimately create a business with over 21.5 million subscribers overall. That would indeed pose a more significant threat to the dominance of South Africa’s two leading operators, MTN and Vodacom which have more than a staggering 70 million customers between them.

Telkom has invested heavily in mobile and data services to counterbalance the decline in landline use and is almost 41% owned by the South African government.
Telkom initially tried to takeover Cell C last year, only to be declined in favour of a recapitalisation plan that was led by Blue Label.
That deal decreased Cell C’s debt by two-thirds to less than R6 billion ($437 million), and the operator last month refinanced R1.4 billion of existing loans on better terms.
Even so, Blue Label’s shares have dropped by 62% this year, partially because of growing concerns about the expense of providing Cell C with more cash and loans.

Telkom’s stock has increased by 20% overall, now valuing the company at R29 billion.

Credit: This article originated from www.moneyweb.co.za

 





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