{"id":24318,"date":"2012-10-16T10:56:37","date_gmt":"2012-10-16T08:56:37","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=24318"},"modified":"2012-10-17T09:30:36","modified_gmt":"2012-10-17T07:30:36","slug":"telkom-cell-c-merger-rumours","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/telecommunications\/24318\/telkom-cell-c-merger-rumours\/","title":{"rendered":"Telkom-Cell C merger rumours"},"content":{"rendered":"

Spurred on by speculation of a merger with mobile operator Cell C<\/a>, shares in\u00a0Telkom<\/a> gained momentum in early trade on the JSE on Tuesday (16 October).<\/p>\n

In the morning session, shares in Telkom lifted 3.53% or 67 cents to R19.67, having closed 5.56% or R1 higher on the JSE on Monday (15 October). The trading action saw Telkom’s market cap move to R10.24 billion.<\/p>\n

A dealer told BusinessTech that investors were buying into speculation regarding a possible merger deal. “Telkom is gathering momentum again this morning on speculation of a deal between Cell C and Telkom,\u201d he said.<\/p>\n

Business Day reported Monday, that Telkom and Cell C were currently \u201cworking on the finer details of a potential merger\u201d.<\/p>\n

According to the newspaper, quoting an industry source, \u201cmeetings have begun between both parties, but at the moment they are still very secretive\u201d.<\/p>\n

The source said that Cell C CEO, Alan Knott-Craig<\/a> \u201cneeds the Telkom infrastructure to successfully achieve his plans with Cell C\u201d.<\/p>\n

Knott-Craig told BusinessTech that market consolidation is inevitable. \u201cMargins are thinning and smaller operators’ ability to compete is being hampered by lack of scale,\u201d he said.<\/p>\n

\"\"<\/a>

Cell C CEO, Alan Knott-Craig<\/p><\/div>\n

Consolidation is key<\/strong><\/p>\n

\u201cConsolidation will help smaller operators compete more effectively with larger players and it is only then that customers will benefit from tariff reductions, network availability and quality of service,\u201d Knott-Craig told BusinessTech.<\/p>\n

\u201cIn 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,\u201d he said.<\/p>\n

The industry veteran would not speculate on what likely mergers or acquisitions are expected in South Africa, but he did highlight that Telkom would need a stronger retail presence to boost its operations.<\/p>\n

The most logical option for Telkom to rapidly grow its retail presence by millions of subscribers in South Africa would be a deal with Cell C.<\/p>\n

Cell C\u00a0currently has 9.4 million customers, and is signing up 700,000 new subscribers each month, the group said last month.<\/p>\n

When Knott-Craig took over as CEO in April 2012 he said he wanted to grow the mobile operator\u2019s market share in South Africa to 25% within the next three years.<\/p>\n

Telkom and Cell C sitting in a tree<\/strong><\/p>\n

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.<\/p>\n

A merger would also remove the need for Telkom to invest billions in its mobile network and to try to grow its subscriber base.<\/p>\n

A potential deal between Telkom and Cell C is, however, nothing new. As far back as 2008 the potential benefits of a tie-up between the two companies was discussed.<\/p>\n

At the time, some industry players suggested that if Cell C shareholder, Oger Telecom<\/a>, bid for a controlling interest in Telkom, it could positively impact both companies\u2019 outlooks.<\/p>\n

Oger Telecom later bid for a stake in Telkom, without success.<\/p>\n

Related articles<\/strong><\/p>\n

Telkom shares rally 5.5%<\/strong><\/a><\/p>\n

Investors knocking on Cell C\u2019s door<\/strong><\/a><\/p>\n

More confusion over Telkom future<\/strong><\/a><\/p>\n

Telkom future in cabinet hands<\/strong><\/a><\/p>\n

Telkom options not tabled before Cabinet<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Spurred on by speculation of a merger with mobile operator Cell C, shares in Telkom gained momentum in early trade on the JSE on Tuesday.<\/p>\n","protected":false},"author":2,"featured_media":24323,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[43,42,26,175,65],"class_list":["post-24318","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecommunications","tag-alan-knott-craig","tag-cell-c","tag-headline","tag-jse","tag-telkom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/24318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=24318"}],"version-history":[{"count":11,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/24318\/revisions"}],"predecessor-version":[{"id":24325,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/24318\/revisions\/24325"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/24323"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=24318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=24318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=24318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}