A decision by Telkom on Monday to issue a “cautionary announcement” to shareholders is most likely related to discussions to buy mobile operator Cell C, analysts said on Monday.
“Shareholders are advised that Telkom is in discussions which may have a material effect on the price of Telkom’s securities,” the telecommunications operator said on the JSE’s Sens news service.
“Shareholders are accordingly advised to exercise caution when dealing in Telkom’s securities until a further announcement is made in this regard.”
Telkom did not, however, provide any details about the discussions.
Publication of the cautionary announcement comes just days after Cell C CEO Jose Dos Santos said the mobile operator had held discussions with Telkom about a possible deal.
Last month, Telkom CEO Sipho Maseko told Reuters that the company would be interested in a deal, provided it could be done at the right price.
Also last month, Cell C parent Oger Telecom claimed it had received six offers to buy its controlling 75% stake in the mobile provider. 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”.
Chakra’s comments followed a Reuters report in March, which quoted Oger chairman Mohammed Hariri as saying that the company would sell its stake if the right offer was forthcoming. “All options are open. If we get a good price, we will sell,” the news wire quoted him as saying.
Cell C, which recently secured new debt financing, is fighting to become a bigger player in the local telecoms 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 share price was trading higher by 1% in late morning trade on Monday. In the past 12 months, the counter has added 27%. — (c) 2015 NewsCentral Media
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