The share price of Telkom tumbled on Monday morning while Blue Label Telecoms rose after MTN South Africa and Cell C announced they had signed a massively expanded roaming deal.
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Telkom said that it expects that the “parties involved” will have considered the newly announced, much-expanded roaming agreement between Cell C and MTN South Africa “in the context of the discussions with Telkom”.
MTN South Africa and Cell C have signed a comprehensive new roaming deal, potentially making it more complicated for Telkom to pursue an acquisition of Cell C.
Communications regulator Icasa on Wednesday moved to caution those involved in various efforts to rescue mobile operator Cell C that any deal must meet “regulatory compliance requirements”.
Telkom wants to buy Cell C in a plan that will include reducing its troubled rival’s debt and renegotiating contracts with suppliers, according to people with knowledge of the situation.
As speculation swirls that Telkom has a made a third approach to Cell C about a potential acquisition, the financially distressed mobile operator on Tuesday said it is making progress on a planned recapitalisation.
Telkom issued a cautionary notice to shareholders on Tuesday saying it is in discussions in relation to a possible acquisition – and the most likely target is Cell C.
Cell C has regularised its payments to MTN South Africa for network roaming and has coughed up almost R750-million between July and September.
Blue Label Telecoms, which bought a 45% stake in Cell C in 2017 for R5.5-billion, has said in its annual report that it is “extremely disappointed” in the performance of the mobile operator.
MTN South Africa CEO Godfrey Motsa said on Thursday that it is not the company’s responsibility to save rival Cell C, but it’s also not in the interests of the telecommunications sector or the country to allow it to fail.