VODACOM MAY TAKE ON CELL C CUSTOMERS

VODACOM is in talks with Cell C about taking on the smaller rival’s contractpaying cellphone customers, which would strengthen its position as South Africa’s telecom market leader, according to people familiar with the matter. The unit of the UK’s Vodafone Group would gain just over 1 million high-paying subscribers from the deal, said the people, who asked not to be identified as the discussions are ongoing. The talks are at an early stage and could yet fall apart, they said. Cell C and its biggest shareholder, Blue Label Telecoms are looking at ways to cut costs and strengthen the balance sheet, as they battle to service $637 million

(R9.1 billion) of debt. Transferring the customers to Vodacom would attract a fee and free Cell C from the cost of servicing clients, including handset subsidies and credit checks, said the people. Cell C could also cut jobs and close some stores after slimming down operations, they said. Representatives for Vodacom and Blue Label declined to comment. A spokeswoman for Cell C said they don’t respond to speculation. Blue Label shares rose as much as 2.4 percent to R3in Johannesburg yesterday, the highest in more than a month. Cell C generated about R3.6bn in revenue from its postpaid customers in the year through May, about 30 percent of sales from cellphone subscribers. The company will be left with those who pay as they go, who don’t spend as much on average as those with contracts. The resulting smaller business would also include Cell C’s broadband customers. Vodacom has about 5.8 million post-paid subscribers in South Africa, meaning a successful deal would see it leapfrog MTN with 5.9 million, and increase its overall lead in the market. | Bloomberg