Telkom shares rally 5.5%

Shares in Telkom closed 5.56% or R1 higher on the JSE on Monday (15 October) amid questions over a potential merger between its mobile arm 8ta, and Cell C.

Business Day reported that several meetings between senior executives had taken place earlier in the year, while “the two parties are now said to be working on the finer details of a potential merger,” the business scribe said.

Telkom responded by saying: “There has not been any formal approach between Telkom and Cell C.”

“It will therefore be unwise and premature to speculate on the desirability to consolidate the two players,” it said.

Telkom’s future is still in the hands of government, with as many as three potential future scenarios having been handed to cabinet by the Department of Communications recently, following a block of a potential merger with Korea based telecommunications business, KT Corp, back in June.

Cell C CEO Alan Knott-Craig told MyBroadband that many potential investors have approached the company, and that there is a great interest to buy into Cell C.

According to Knott-Craig, the most challenging and costly part of their business is getting people to join Cell C.

“Getting consumers to change their mobile provider, and hence their behavior, is very difficult,” said Knott-Craig. “People complain about their mobile providers, but despite these complaints they often stay where they are.”

The Cell C CEO said that he hopes that they will be successful in generating enough revenue to sustain their drive to sign up new customers and speed up the rate of change.
“It should be a self-funding process,” said Knott-Craig.

Cell C currently has 9.4 million customers, and is signing up 700,000 new subscribers each month, the group said last month.

When Knott-Craig took over as CEO in April 2012 he said he wanted to grow the mobile operator’s market share in South Africa to 25% within the next three years.

In annual results for the year ended March 2012, Telkom reported that its mobile arm had attracted in excess of 3,05 million total subscribers, and 1.48 million active subscribers.

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Telkom shares rally 5.5%