Johannesburg - Britain's Vodafone and South African fixed-line phone company Telkom declined on Sunday to comment on a report saying the UK group was interested in a possible takeover of the South African firm.
South Africa's Sunday Times said Vodafone Chief Executive Arun Sarin was in South Africa this week for talks, which could lead to a takeover of Telkom, but gave no source.
A spokesperson for Vodafone declined comment, saying only that the report was "pure speculation".
A Telkom spokesperson confirmed Sarin held talks with Telkom Chief Executive Papi Molotsane about their jointly-owned South African cellphone operator, Vodacom.
Ongoing meetings
But Lulu Letlape, group executive for corporate communication, declined to comment on whether they also discussed a possible takeover of Telkom, Africa's biggest telecoms company.
"There are no outputs from that meeting as yet. These are ongoing meetings. That is speculation about what the discussions are about," she said.
"For some time now the CEO of Telkom has been saying we are going to be talking to Vodafone as a continuous process of trying to look at growing Vodacom. As equal shareholders, we have to look at ways of growing Vodacom."
Telkom, which is still controlled by the government with a direct 37.7% holding, has a market capitalisation of $10bn. State investment arm the Public Investment Corporation (PIC) holds a further 15.1%.
The newspaper said Sarin also held talks with senior representatives from the deputy president's office and the department of trade and industry, plus the chairpersons of regulatory body Icasa and the PIC. Letlape referred queries to Vodacom about whether those meetings took place.
Fruitful talks
Sarin was quoted by the Sunday Times as saying the talks with Telkom had been very fruitful, but declined to comment on the possibility of Vodafone taking over Telkom.
The Times said Sarin indicated that Vodafone was prepared to lift restrictions on Vodacom operating in the upper half of the continent. Telkom's Letlape confirmed that was a subject of the discussions, but said no firm decision had been made.
While Vodacom has seized almost 60% of the South African market, it has been hamstrung by the shareholder agreement with Vodafone that bans it from operating north of the equator, stifling expansion into the rest of Africa.
Demand for mobile phones in Africa is booming due to patchy fixed-line infrastructure and companies are clamouring for a foothold on the continent, with cellphone operator MTN offering $5.53bn last month for Dubai-based Investcom.
