Johannesburg - Shares of Telkom
[JSE:TKG] have jumped on speculation that the struggling telecom firm could merge with unlisted Cell C.
Business Day reported on Monday that senior executives at both companies have held meetings about a potential merger, citing a source.
Both firms have been struggling to keep up with bigger rivals Vodacom and MTN.
Telkom, the former state-run utility, is still about 40% directly owned by the government. Its mobile service, the smallest of the four major carriers, has battled to win market share.
Cell C needs Telkom’s extensive infrastructure for its planned expansion, the source told Business Day.
Telkom spokesperson Pynee Chetty said there have been no formal talks by the two operators over the issue.
“There has been not any formal approach between Telkom and Cell C and it would therefore be unwise and premature to speculate on the desirability to consolidate between the two players,” he said.
Cell C’s Chief Executive Alan Knott-Craig said in a statement: “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.”
Telkom shares rose as much as 3.75% in intraday trading to R19.75, adding to a 5.6% gain in the previous session, before succumbing to profit-taking.
By 14:20 the shares were trading hands at R18.76, down 1.26% on the previous day's close.