Telkom said to be in merger talks with Cell C 

The talks are said to be in advanced stages. 

Telkom SA said on Tuesday that it was in discussions over a potential acquisition but it didn’t name a company it was targeting. 

However, according to Bloomberg, Telkom has offered to buy Cell C and combine South Africa’s two smallest mobile network operators to better compete against larger rivals. 

Telkom is 40 percent owned by the state. 

The bid includes a plan to reduce Cell C’s debt and renegotiate contracts with suppliers, two people to Bloomberg, asking not to be identified because negotiations are ongoing. Telkom wants to take over the management of Cell C’s business, they said.

The approach comes as Cell C explores options with MTN and local investors known as the Buffett Consortium to recapitalize the company, which may include the sale of some of its assets. The two offers will be considered side-by-side as Cell C and its owners try to restructure R9 billion of debt, the people said.

Talks with MTN are at an advanced stage, Cell C said in an emailed statement on Tuesday, declining to comment on Telkom.

“Cell C remains focused on ensuring operational efficiencies, restructuring its balance sheet, implementing a revised network strategy and improving overall liquidity,” the company said. “Cell C will look at any opportunity that will assist with the company’s long-term viability. Any opportunity will need to undergo a due-diligence process that takes into account all stakeholders.”

MTN is still in discussions with Cell C “regarding opportunities that could benefit both businesses,” spokeswoman Jacqui O’Sullivan said in an email to Bloomberg. “These discussions are progressing and we can therefore not comment further at this stage.”

Telkom said it was in talks on a potential acquisition on Tuesday, without identifying the target. This is the third time that the Pretoria-based firm is trying to buy Cell C after the target rather opted for a recapitalization with Blue Label Telecoms, which owns 45 percent of Cell C.