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Is Telkom readying to buy Cell C?

Johannesburg - Local fixed-line telecommunications company Telkom has issued a cautionary announcement, sparking speculation that it could buy Cell C.

On Monday morning, Telkom issued a market update that said it is in “discussions which may have a material effect on the price of Telkom’s securities”.

Telkom didn’t disclose what the discussions are about, but a number of reports and analysts on Monday said the announcement could be linked to a possible acquisition of Cell C.

The cautionary statement from Telkom comes as Saudi Arabia’s Oger Telecom is looking to sell its majority stake in Cell C.

Earlier this year, senior Telkom executives were also quoted in reports as saying they’re interested in buying Cell C.

Last week, Fin24 asked Cell C chief executive officer José Dos Santos whether Telkom was looking to buy the company.

He said that he couldn’t speak for his shareholders but he did comment on the rumours surrounding Telkom and Cell C.

"The local comments over the three-four weeks where Telkom was interested, well if they're interested, write out a cheque and buy the asset,” said Dos Santos.

"If you're interested, buy it.

"It's a tongue-in-cheek comment from my side, from management. If you want it then buy the damn thing - what are you waiting for,” he said.

Dos Santos also said that five to six parties are interested in buying Cell C owing to the company being an “attractive asset”.

Dos Santos said last week that Cell C is operationally profitable for the first time since it launched in 2001.

Cell C is South Africa's third largest mobile network with 22 million subscribers.

Telkom’s cautionary statements

However, it’s not the first time in the last 18 months that Telkom has issued cautionary statements.

In April 2014, Telkom and MTN approached the Competition Commission regarding a network sharing and roaming agreement.

After Telkom issued cautionary statements for more than a year, the Competition Commission in August finally ruled that deal would be anticompetitive.

Subsequently, both companies withdrew from talks around a possible network sharing and roaming agreement.

Tell us your thoughts: Would a Telkom acquisition of Cell be good for the South African market? Click here to let us know and your views could be published.

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