Telkom weighs another Cell C bid

Telkom was considering making an offer to buy a majority stake in Cell C that would lead to a combination of SA’s third and fourthlargest mobile phone companies, according to people familiar with the matter.

Telkom is considering an offer to buy a majority stake in Cell C that would lead to a combination of SA’s third- and fourth-largest mobile phone companies, say people familiar with the matter.

The former landline monopoly is seeking management control of the Johannesburgbased carrier, said the people who asked not to be named as the plans are private. Telkom hasn’t made a final decision and the deal could yet fall through, they said.

Telkom and Cell C declined to comment. A tie-up between Cell C and Telkom’s mobile phone division would create a business with about 21.5-million subscribers. That would pose a slightly greater threat to the dominance of SA’s top two operators, Vodacom Group and MTN Group, which have more than 70-million customers.

Telkom, which has been investing heavily in mobile and data services to offset the decline in landline use, is almost 41% owned by the government.

Telkom initially attempted to take over Cell C in 2017, only to be rejected in favour of a recapitalisation plan led by Blue Label. That deal reduced Cell C’s debt by two-thirds to less than R6bn ($437m), and the firm refinanced R1.4bn in borrowings on better terms in November.

Even so, Blue Label’s shares have slumped 62% in 2018, partly on concerns about the cost of providing Cell C with additional cash and loans.

Telkom’s stock has gained 20%, valuing the company at R29bn.