Six groups bid for Cell C: report - TechCentral

Six groups bid for Cell C: report

Cell-C-640

Cell C parent Oger Telecom has received offers to buy its controlling 75% stake in the South African mobile telecommunications operator from six groups, it was reported on Wednesday.

Business Day quoted Oger Telecom chief legal officer and deputy CEO Mazen Abou Chakra as saying that “six groups approached us with an interest in acquiring our stake in Cell C”.

The newspaper said Chakra told it that Oger has made no decision about whether to sell its interest in the debt-laden operator, but said it was happy with Cell C’s performance over the past 12-18 months and remained “fully committed” to the business.

Chakra’s comments follow a Reuters report in March, which quoted Oger chairman Mohammed Hariri as saying that the company will sell its stake if the right offer is forthcoming.

“All options are open. If we get a good price, we will sell,” the news wire quoted him as saying.

Hariri told Reuters that Oger had hired Goldman Sachs to advise it on a possible sale. The decision to hire the firm was triggered by the decision by communications regulator Icasa to amend termination rate regulations that previously had been strongly in favour of smaller network operators, including Cell C. Termination rates are the fees operators charge one another to carry calls between their networks.

More recently, Reuters quoted Telkom CEO Sipho Maseko as saying that at the right price the company would consider an offer to buy Cell C. He reportedly described an acquisition of the mobile operator as an “interesting proposition”.

“I’d like to do something with them. At the right price, I’m a buyer,” he is reported to have said. He also said Telkom has a strong balance sheet, giving it the “flexibility to pursue … options”.

The recent decision by the Competition Commission to support a proposed mobile infrastructure-sharing deal between Telkom and MTN could add impetus to a Telkom approach to Oger Telecom.

Cell C, which recently secured new debt financing, is fighting to become a bigger player in the local telecommunications market, cutting prices and aggressively attempting to poach both prepaid and contract users from its bigger rivals. It has also announced plans to build a 4G/LTE network.

Telkom’s mobile arm, a late fourth entrant in the mobile market, has struggled to gain traction and has incurred losses running into billions of rand. However, the unit is on the mend.  — © 2015 NewsCentral Media

7 Comments

  1. Ofentse Letsholo on

    Well as long as the investors are loyal to the company we are consumers we don’t have to worry and expect the best from Cell C.

  2. PullYourselfTowardsYourself on

    Telkom is the only real suitor here, with an appetite for debt and willing to do anything to turn around their failed mobile business… Cell C has a huge customer base to offer them, albeit a low value one.

    Orange – won’t enter the market as no.3, but they might do it to hurt MTN. However, there’s not really a francophone market here, so it doesn’t fit the typical acquisition criteria. Airtel are exiting several African markets right now, so be looking at acquisition in a highly saturate and competitive African market is highly unlikely. So besides them, who really has the desire to enter the SA mobile market via an acquisition? Who else could leverage group assets to lower costs, enhance Cell C’s offerings and accelerate growth in the high ARPU and business domains?

    I think it’s Telkom only for now…

  3. Good points. Only Telkom or the certifiably insane would buy a company that has not managed a profit in its 13+ year history. Unless of course in the purchase price a significant portion of the debt is taken off the table with Oger
    cutting its continuing losses to be able to make a quick exit.

  4. Still a worthwhile buy considering future prospects if you look at Telkom’s disastrous endeavour, assuming you are doing it to enter the market. There is tremendous value to be unlocked with 20 m subscribers and most users don’t mind the daily barrage of sms spam so long they have the cheapest rates in the country, or continue to appear that they do.

  5. Orange is originally British and still has a huge presence in Britain which is not a Francophone country, despite not being their headquarters anymore. Their ‘presence’ currently in SA is laughable and maybe just a bellwether for future involvement. There are many companies who are in the market you have not listed: KT (previously in SA), NTT (already in SA), Softbank, AU, Bhartel, Carlos Slim, etc. Telkom is the only company daft enough to advertise their interest and chase up the price.