Telkom update on Cell C acquisition

·16 Nov 2015

Telkom CEO Sipho Maseko says that the group hopes to achieve break-even for its mobile business by year end.

“We are confident that our mobile business will achieve break-even on EBITDA (earnings before interest, tax, depreciation and amortisation),” the chief executive said in a statement on Monday, announcing the company’s interim results for the six month period ended September 2015.

On Monday, Telkom noted the following highlights within its mobile business:

Mobile data revenue increased 68.5% to R711 million
Active mobile subscribers increased 11.5% to 2,257,404 with a blended ARPU of R89.05
Contract customers up 58% to 680,933
LTE sites up 8% to 1, 381
Mobile EBITDA loss of R37 million, from R385 million loss before – up 90.4%.

“We are very pleased with the improved performance of our mobile business,” Maseko said.

He said that the company will continue to consider organic and inorganic initiatives to enhance and further improve the performance to the mobile business.

“To this end, we have announced that we are considering a potential transaction to acquire all of the shares of Cell C.”

Bloomberg had previously reported that Cell C’s major shareholder, Oger Telecom, rejected a R14 billion offer from Telkom in October.

The Dubai based firm is believed to be seeking R22 billion for Cell C, and has set a late November deadline for a new offer, according to Bloomberg’s sources.

“We are currently performing due diligence on Cell C, and will update shareholders as the process progresses.”

Cell C meanwhile, announced in September that it is now a profitable company, boasting 22 million customers.

In South Africa, MTN has just under 30 million customers, generating revenue of R39 billion, while Vodacom has 33.7 million customers generating R62 billion annually.