Rumours of Telkom, Cell C merger

2012-10-16 14:53

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.

  • tumisang.kolobe - 2012-10-16 15:06

    A very good move from Cell C indeed, Telkom is a cash and cow and they can do with more funds for expansion, Cell C is definitely the future

  • pieter.kunz - 2012-10-16 15:10

    Nooooo! I wanted to move to cellc but wont if this is the case as i dont do business with telkom :(

      syd.harling - 2012-10-16 15:25

      You got that right pieter.kunz

      alwyn.hanekom.9 - 2012-10-16 15:48

      Why not?

      mark.singh.9889 - 2012-10-17 11:51

      Move to CellC? Why? They just as pathetic as telkom.

  • bertus.leroux.14 - 2012-10-16 15:22

    ooh my goodness,the flop is just going to get bigger..

  • eric.martinsich - 2012-10-16 15:24

    So Ex Telkom Employee going back to his routes. Alan Knott-Craig. Telkom Sells Vodacom Shares. Alan jumps ship from Vodacom and Goes to Cell C with the view of bringing them and Telkom together. So my friends 8TA will die and more retrenchments or what. FibreCo Telecommunications, a joint venture between Cell C, Convergence Partners and Internet Solutions, has passed the halfway mark of the first link of its R5-billion national fibre-optic broadband network. The company said that the construction of 600 km of the targeted 1 000 km stretch from Johannesburg, through Bloemfontein, to East London has been completed. This formed part of FibreCo’s three-phase, 12 000 km, high-speed, open-access, longhaul, fibre-optic network plans. FibreCo aimed to complete the first 2 000 km connecting Johannesburg and Cape Town through Bloemfontein, Port Elizabeth and East London by the third quarter of 2013. “This is a significant milestone for FibreCo, and is a good indication that the construction process is on track,” said CEO Arif Hussain, adding that service could be offered on the route from early 2013 as partial routes came on stream.

  • napolita.kio - 2012-10-16 15:25

    Yin-yang oh yeah. From the embroy out comes Vodacom from Telkom's belly; no sooner Telkom spits out Vodacom. From the shells together comes Telkom and CellC. What's the glue in all of this? Well, I did not say AKC, not me!! But hell, what was the commercial rational for selling Vodacom? I did not say politics, not me! Dare I say ABSA's sale to Barclays falls under the same suspicion of possibly "political reasons" Either way, just moving chairs

  • japie.bosman - 2012-10-16 15:25

    With TELKOM infrastructure and access to bandwidth Cell C will be able to drop their data rates even more and then Vodacom and MTN will really have to start worrying. Go Cell C

      napolita.kio - 2012-10-16 15:47

      Japie, in terms of " to drop their data rates.." I agree with you in theory; or should I say on the condition that neither the head of CellC nor Telkom run the combined entity. Here's my reason for the above: - Alan Knott-Craig cannot for if he could he failed to demonistrate he can while at Vodacom. - With all due respect to Ms Moholi (Telkom CEO), I however, feel that she was not up to scratch; my cynical mind says she got the job as "she deserved" to replace Sizwe Nxasana the previous CEO but "somehow" the job went to Papi Molotsane[sic], if my memory serves me well. Make no mistake, I do believe a tie up would be good.

  • braamc - 2012-10-16 15:28

    Firstly get rid of that useless BEE senior management to start off

      themba.thwala.98 - 2012-10-17 11:36

      Telkom's executive team of 8 is made up of 4 Africans, 3 whites and 1 Indian. Their senior management team of about 32 people is made up of 16 whites. Based on the foregoing, it is clear that your comments are based on ignorance. The herd mentality is also the result of the number of robots who `liked` your baseless comments

  • gerald.king.589 - 2012-10-16 15:34

    Birds of a feather...

  • john.dough.5836711 - 2012-10-16 15:38

    This is nonsense, as long as the cANCer control Telkom it will never work. CellC would be way better off going it alone and buying up Telkoms assets when it fails.

      themba.thwala.98 - 2012-10-17 11:32

      This can be viewed as partial privatisation of Telkom. I think it is good

  • navane.dejager1 - 2012-10-16 16:44

    what will happen to \8ta\ if this merger happens?

  • - 2012-10-16 16:50

    Telkom will just stuff Cell C up had to pay telkom 24months for no service as they could not find the fault on my land line. Reported on line 2 days later SMS tecnnical dept. has received complaint 10 min.later SMS attending to fault 10 sec.later fault resolved. Get home no telkom technician been to my home line still not working. These so called technicians sit in vechiles two blocks from their depots and send SMSs after loafing the whole day. Definitly will go down!!

      Michael Kleber - 2012-10-17 06:52

      I had the same problem with my internet had to report it 4 times , telkom phoned to say fault in hand then received sms that fault was cleared only to find internet still faulty , they are not technicians as they receive no technical training

  • Mandy Casey - 2012-10-16 16:59

    Worst move ever, Mtn and Vodacom must be smiling. Watch CellC lose customers even based on speculation.

  • quartus.vanzyl - 2012-10-17 08:04

    A state entity merge with a private company?? Thats new!

  • eric.martinsich - 2012-10-17 12:03

    The Chairman of Convergence Partners , Andile Ngcaba used to be the ANC communications minister. He is part of Cell co and Fibreco rollout. Cyril Ramaphosa as General Secretary founded NUM and they grew from 6,000 to 300,000 members. NUM is one of the main unions backing my government. The Seacom cable is funded mainly from private equity companies, including Andile Ngcaba's Convergence Partners and Cyril Ramaphosa's Shanduka Group. The Cell C rollout will eventually link up with Seacom. Need I say more on how money will be made and more job losses.

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