Telkom dismisses Cell C merger talks

Telkom CEO Sipho Maseko has dismissed talk of a potential merger deal with South Africa’s third mobile operator, Cell C.

It follows long running speculation that Telkom and Cell C were currently “working on the finer details of a potential merger”.

“We are not in talks (with Cell C) Maseko told BusinessTech following the group’s results presentation on Friday (14 June).

“I’ve spoken with all the operators, not specifically Cell C,” Maseko said. “All options are on the table,” he added regarding possible future acquisitions.

Sipho Maseko
Sipho Maseko

Telkom reported a 3.42% increase in active mobile subscribers to 1.54 million in South Africa (2012: 1.48 million) in results for the year ended March 2012, having launched its mobile arm in October 2010.

The telco saw a decrease of over 58,000 post-paid subscribers over the financial year to 375,938, while adding 118,879 pre-paid subscribers to 1.15 million.

Blended ARPU (average revenue per user) for the period dropped 17% to R61.47 from R74.16 in 2012.

ARPU from pre-paid increased 14.7% to R23.96 (2012: R20.89), while post-paid dropped almost 20% to R166.13 (2012: R206.83).

Comparably, MTN South Africa recorded a 15.4% rise in subscribers for the year ended December 2012, to 25.4 million. Blended ARPU declined by 9% to R122.

Vodacom meanwhile, saw a 4.9% lift in subscribers to 30.3 million, increasing by 1.4 million customers in the year ended March 2012. Blended ARPU declined 17.8% to R129.

“Mobile needs a bigger solution,” Maseko said. “Telkom needs mobile…the days of mobile only are over,” he said pointing to a converged offering from the group.

The chief executive told analysts at Telkom’s results presentation: “I don’t know if the winner will be mobile only,” further suggesting that integrated players were more likely to survive the future telecoms landscape in South Africa.

In April, Cell C CEO Alan Knott-Craig said that Cell C would need to be swallowed up by a “larger group to compete with the likes of Vodacom and MTN”.

In October 2012 Knott-Craig told BusinessTech that market consolidation is inevitable. “Margins are thinning and smaller operators’ ability to compete is being hampered by lack of scale,” he said.

“In my view, there will be some form of consolidation or partnership in the industry in the near future. However, any decisions on consolidation or future partnerships involving Cell C would be for our shareholders to decide upon,” Knott-Craig said.

More about Cell C and Telkom

Telkom’s modest mobile numbers

Cell C looking for partner: report

Telkom and Cell C merging?

No Cell C deal on the table: Telkom CEO

Investors knocking on Cell C’s door

8ta-Cell C merger a new axis of competition: F&S

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Telkom dismisses Cell C merger talks