Telkom on Friday informed investors that it is pursuing an acquisition of Cell C. This came three days after it said it was in talks about the purchase of an unnamed company, which TechCentral independently verified was Cell C well ahead of Friday’s update. So, why didn’t Telkom just say so in the first place?

The answer, it appears, is more than a little intriguing.

TechCentral has learnt that Telkom and 45% Cell C shareholder Blue Label Telecoms had a meeting with the JSE on Thursday, apparently to address concerns that the bourse had over Telkom’s first cautionary on Tuesday, and subsequent media coverage that confirmed that the target was Cell C.

Well-placed sources said the JSE was concerned that, though the company hadn’t named the target, the media was reporting as fact that it was Cell C.

For some reason, which will probably become apparent in the days or weeks ahead, someone is said to have put pressure on Telkom not to name the target. Was it Cell C itself, or Blue Label Telecoms? Or both? And if so, why?

Perhaps the answer lies in Blue Label’s share price crashing immediately after Telkom’s disclosure on Friday. Was the market expecting a better, and cleaner, outcome from the deal Cell C was pursuing with MTN South Africa? Are there concerns about Blue Label’s loans to Cell C and whether they will be repaid? Was Cell C worried that the Telkom approach could scupper its impending deal with MTN?

What changed?

And why is Telkom suddenly so interested in Cell C again, after twice having walked away? After previously conducting a due diligence, Telkom CEO Sipho Maseko has said on several occasions that he was no longer interested in Cell C. What changed?

Hilton Tarrant, writing for Moneyweb, argued that Maseko may have realised he’s run out of growth opportunities, with Telkom’s subscriber gains in its mobile business slowing sharply in six months to end-September. Another theory I’ve heard is that Maseko sees a Cell C, MTN tie-up — whatever form that takes — as an existential threat to Telkom. There may be truth to both of these arguments.

What’s clear is that Maseko is running rapidly out of time if he wants to do a deal — if a deal is even possible. I hear MTN and Cell C have concluded the details of their “expanded roaming agreement”, which is likely to see the former taking over management over big parts of the latter’s network, and that the deal is simply awaiting the signatures of the respective CEOs, Godfrey Motsa and Douglas Craigie Stevenson.

Another theory is that Telkom is simply trying to muddy the waters, something it’s alleged to have done with Cell C before. It’s been widely suggested that in its previous approaches, Telkom was not terribly serious about pursuing a deal, but saw the opportunity to sow instability in a competitor’s business. I’m not sure I buy that argument (especially since it went to the trouble of a due diligence), but it’s one of the theories being peddled and can’t be discounted.

Certainly, the regulatory hurdles in the way of a Telkom, Cell C tie-up are enormous and could make any deal that doesn’t have strong political backing impossible. My colleague Toby Shapshak quoted communications minister Stella Ndabeni-Abrahams on Tuesday as saying that she had not been informed of any deal involving Telkom and Cell C. That may have changed by now, of course.

The JSE won’t say what transpired at its meeting on Thursday with Telkom and Blue Label, or whether Telkom was reprimanded for its bland first cautionary. “We cannot comment because the JSE, as a licensed exchange, is precluded by provisions of section 73 of the Financial Markets Act from providing you or any other party with confidential information that is obtained in the performance of its regulatory duties and functions,” said Andre Visser, GM of issuer regulation via e-mail.

Telkom didn’t respond to e-mailed questions sent on Thursday about the JSE meeting, referring simply to Friday’s cautionary announcement. Among other questions TechCentral asked the company, but received no response to, were:

Can Telkom confirm a meeting took place with the JSE and which parties other than Telkom and the JSE were present?
What was discussed at the meeting? Further to this, was Telkom in any way reprimanded or cautioned by the JSE for its cautionary statement on Tuesday — if so, why?
TechCentral understands that one or more parties are opposed to Telkom naming the acquisition target and may have threatened legal action to try to stop it from doing so? Is this correct? Are you able to shed any additional light on this and why this might be the case?