Cell C hangs up on Telkom

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Cell C hangs up on Telkom

Published Date: 2019-12-02 | Source: Stephen Gunnion | Author: Stephen Gunnion

Cell C hangs up on Telkom

The struggling mobile network operator has spurned a potential takeover by its rival.

Telkom says Cell C has rejected a takeover, ending its plans to more than double its mobile subscriber base and put it on a more evening footing with larger rivals MTN and Vodacom. The end of talks means Telkom also won't be saddled with some of its rival's large debt pile, estimated at about R9 billion. Its shares rose as much as 6.1%.

Two weeks ago Telkom confirmed it was making a third attempt at acquiring Cell C to grow its exposure to mobile and data services as its fixed-line business dwindles. It said it had substantially completed a due diligence on the group but that any deal would require a big debt restructuring. Telkom has about 11.5 million subscribers following strong growth last year. According to data compiled by MyBroadband, Cell C has about 16 million. MTN and Vodacom have around 29 million and 44 million mobile subscribers respectively in South Africa.

Cell C and MTN have since signed a new roaming and services deal, paving the way for Cell C's much-needed recapitalisation. The accord followed an earlier roaming agreement, signed in May 2018, under which MTN provided Cell C with 2G, 3G and 4G roaming services on its network in parts of the country. The new agreement expands access to enable Cell C to roam on MTN's network in all areas of South Africa.

In February, the Buffet Consortium concluded a binding term sheet that would result in it taking a minority stake in Cell C to help strengthen its balance sheet and leave it with enough capital to fund future growth.

Telkom closed 3.9% up at R46.89 on Friday and Blue Label Telecoms was also 3.9% up at R3.24.





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