Telkom said to make bid for Cell C

The deal could create a substantial mobile services entity.

Telkom is considering making an offer to buy a majority stake in Cell C, a deal that would see the merger of South Africa’s third- and fourth-largest mobile-phone companies, according to a report by Bloomberg.

People familiar with the matter told Bloomberg that Telkom is seeking management control of Cell C.

Telkom is a former landline monopoly that is partly owned by the South African state. The state holds a 41 percent stake in Telkom, which has been investing heavily in mobile and data services to offset the decline in landline use.

Telkom, a former landline monopoly, is said to have not made a final decision and the deal could yet fall through.

A successful merger between Cell C and Telkom’s mobile-phone division would create a business with about 21.5 million subscribers, according to Bloomberg. This would trigger concerns from competition authorities, as the deal has the potential to dominate South Africa’s telecommunications market.

The deal would also pose a challenge to two largest telecommunications operators in South Africa, Vodacom Group and MTN Group, which have a more than 70 million customers between them.