Telkom looking to buy Cell C – Report

Bloomberg has reported that Telkom is considering a bid of $1 billion (around R13 billion) for Cell C, citing three people familiar with the matter.

“Investment banks are also approaching other potential bidders with the firepower to take on the deal, said two of the people,” reported Bloomberg.

The news comes two weeks after Cell C had its corporate credit rating downgraded by S&P Global after missing an interest payment on senior secured bonds.

Cell C is currently in the process of restructuring its debt in an acquisition deal involving Blue Label Telecoms and other shareholders.

Cell C spokesperson Karin Fourie said the Cell C recapitalisation remains on track and is supported by the equity investors as well as the existing lenders to the business.

This is not the first time Telkom has expressed an interest in buying Cell C.

In November 2015, Telkom announced it was in discussions with Cell C to acquire all shares in the company.

Shortly afterwards, Telkom said it had terminated talks to acquire the full shareholding of Cell C from Oger Telecom.

The decision was a “mutual agreement” with Oger, following a period in which the telco conducted a due diligence on Cell C, said Telkom.

“Through Telkom’s engagement with Oger Telecoms in relation to Cell C, it has become clear that there is a difference between the parties on the assessment of value of the proposed transaction,” said Telkom.

Update: Frost & Sullivan Africa comment

Naila Govan-Vassen, an ICT analyst at Frost & Sullivan Africa, said the proposed transaction would give Telkom the opportunity to expand its footprint in the mobile market.

“It would push the combined unit’s share of the subscriber market to around 30%, and offer competitive mobile services to enterprises and consumers,” said Govan-Vassen.

Frost & Sullivan Africa’s Anesu Charamba added that ICASA “may not have a problem approving of this deal”, as it will ensure that “all three operators are in the same level of competition in terms of subscriber base and spectrum”.

Now read: Cell C downgraded to lowest junk rating

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Telkom looking to buy Cell C – Report