Telkom SA SOC Ltd is considering making an offer to buy a majority stake in Cell C Pty Ltd that would lead to a combination of South Africa’s third- and fourth-largest mobile-phone companies, according to people familiar with the matter.
The former landline monopoly is seeking management control of the Johannesburg-based carrier, said the people, who asked not to be named as the plans are private. Pretoria-based Telkom hasn’t made a final decision and the deal could yet fall through, they said.
Telkom and Cell C declined to comment.
Shares in Blue Label Telecoms Ltd, which owns 45% of Cell C, gained as much as 8.7%, the most since July 20, and traded 4.2% higher at R5.75 as of 11:09 a.m. in Johannesburg. Telkom fell 4.3%.
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 South Africa’s top two operators, Vodacom Group Ltd. and MTN Group Ltd, which have more than 70 million customers between them.
Telkom has been investing heavily in mobile and data services to offset the decline in landline use, and is almost 41% owned by the government.