Telkom interested in buying Cell C: report

·14 Aug 2015

Telkom CEO Sipho Maseko has expressed interest in buying mobile operator Cell C, calling it an “interesting proposition”, according to a report by Reuters.

It was first revealed in March 2015 that Cell C’s largest shareholder, Oger Telecom, was looking to sell off its 75% stake in the local operator.

The group’s chairman said the decision to sell the stake in Cell C was triggered by the Independent Communications Authority of SA’s revised termination rates.

In February, Bloomberg reported that Cell C was working with Goldman Sachs to explore its options in SA, including a possible sale.

Citing sources familiar with the matter, Bloomberg said a possible sale would be to “domestic competitors”.

Telkom has not fared well in the mobile space, with the group’s mobile unit consistently running at a loss.

“Cell C is an interesting proposition. I’d like to do something with them,” Maseko said in an interview with Reuters.

“At the right price, I’m a buyer.”

This is not the first time a possible merger between the two operators has popped up.

In 2013, former Cell C CEO Alan Knott-Craig confirmed that talks between the two companies had taken place – though nothing ever came of it.

Were Telkom to buy Cell C, it would acquire around 20 million subscribers, but would also have bought a company faced with network and financial issues.

Standard & Poor’s noted in July that Cell C was operating in a “high-cost environment and inflexible competitive space”, which will result in negative cash flow for the group.

The firm anticipates that the company will continue to rely on external funding sources through 2017.

Telkom, meanwhile, has been on a cost-cutting mission, and is currently in the process of cutting its workforce by 4,400 people – 2,400 of which have already left the company through voluntary packages.

Despite this, the group hasn’t shied away from sizeable acquisitions, having just completed a R2.7-billion buyout of ICT firm Business Connexion.