Wide interest in Telkom Mobile deal

Cell C and Telkom are no longer in talks over a potential deal between South Africa’s third operator, and Telkom Mobile.

This is according to a source who told BusinessTech that Telkom did not accept Cell C’s offer “because Cell C is running at a loss”.

Sipho Maseko, Group CEO at Telkom, admitted last year that the Telkom Mobile business is going through “a very difficult time”, and is in discussions with parties over future operations.

In July, Cell C CEO Alan Knott-Craig confirmed that the mobile operator had addressed talks of consolidation with Telkom Mobile.

Knott-Craig, who is recovering from a stroke, also said that the company is on a a three year path to profitability, maintaining that operators in SA needed a market share of between 20-25% to be profitable. the group’s market share is at approximately 17%, currently.

Cell C is not obliged to provide its financial details, as it is not a public company, and has not done so since Knott-Craig took the reins in January 2012.

A separate source said that both Telkom and Cell C had decided to walk away because the numbers did not add up.

There were rumours that Telkom had considered buying Cell C, to combine it with its mobile arm, with a figure of R10 billion bandied about.

Telkom has struggled to acquire customers for its mobile business since launch, as 8ta in 2010, while Cell C in turn has picked up significant market share over the past 18 months, but has come under fire for its poor network.

Orange and MTN

Telkom has also been approached by french-based mobile operator Orange SA, and MTN, the source told BusinessTech.

The french firm already has a presence in South Africa, having launched Orange Horizons as a subsidiary dedicated to seeking out new business opportunities, in January 2013.

The group already sells products in SA through its website, and has a business unit serving high profile companies in the mining, and petroleum industry.

In a recent interview with BusinessTech, Orange Horizons CEO, Sébastien Crozier said that, given the spectrum, “we could enter the market as a real player,” but only through an agreement with an existing player to be on its network.

“In response to the recent speculation in the press around MTN and Telkom, in accordance with good governance, MTN does not comment on market rumour and speculation,” the group has said in a statement to previous questions on the topic.

BusinessTech reported that a firm from Malaysia is tabling an investment proposal of up to $3 billion (R32 billion) relating to Telkom’s mobile business, which would include the setting up of factories for the building of tower infrastructure, thereby also fostering job creation.

Telkom provided the following statement regarding progress on its mobile discussions:

“Telkom continues to review its operations in an effort to stabilise the business and unlock its value. The company is therefore engaging with various parties to consider best options for the business, however Telkom is not in a position to disclose any further details at this stage.  We will inform the market and all our stakeholders of the outcome of the discussions at the appropriate time. ”

More on Telkom and Cell C

Cell C hints at Telkom Mobile merger

Telkom Mobile attracts R30 billion bid

Telkom in talks over mobile arm

Telkom and MTN in talks: report

Telkom dismisses Cell C merger talks

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Wide interest in Telkom Mobile deal