Telkom 'prepared' to spend billions buying Cell C

2015-09-28 16:13 - Chris Spillane and Manuel Baigorri
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Cell C is pushing to grow market share in SA. (Duncan Alfreds, Fin24)

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Johannesburg - Telkom is seeking to buy mobile-phone operator Cell C for less than the R22bn value placed on the South African company by its owners, according to a person familiar with the situation.

Telkom, South Africa’s biggest landline company, is prepared to pay no more than R18bn for the business, according to the person, who asked not to be identified as the matter is private.

Cell C’s 75% shareholder, Dubai-based Oger Telecom, put the higher price-tag on the company, which includes R14bn, according to a second person familiar with the talks.

Telkom operates South Africa’s fourth-biggest mobile-phone provider and is seeking to grow the business to help offset declining sales at its larger fixed-line unit.

Cell C is the country’s no. 3 wireless operator, behind market leaders Vodacom and MTN.

Telkom Chairman Jabu Mabuza said last month he sees an acquisition of Cell C as a possible way to expand the unit.

“We cannot comment as this is a shareholder matter,” Cell C spokeswoman Karin Fourie said by e-mail.

Telkom is a publicly traded company and reports information when necessary, spokeswoman Jacqui O’Sullivan said by e-mail.

Telkom shares fell 1.1% to R66.79 as of 3:14 p.m. in Johannesburg, valuing the Pretoria-based company at R35.2bn rand.

The shares have declined 4.1% this year, compared with a 7.2% gain on the FTSE/JSE Africa All- Share Index.

Telkom is about 40% owned by the South African government.

Cell C Chief Executive Officer Jose Dos Santos told Johannesburg’s Talk Radio 702 on Sept. 23 that the company has held talks with Telkom about a potential takeover.

Telkom said Monday it’s in negotiations that could affect its share price, without giving further details in a statement to the stock exchange in Johannesburg.

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