Telkom weighs an­other Cell C bid

Business Day - - Front Page - Agency Staff

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.

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