Telkom 'mulling' R13bn bid for Cell C - TechCentral

Telkom ‘mulling’ R13bn bid for Cell C

Cell C’s head office north of Johannesburg

Telkom is considering a bid of as much as R13bn for Cell C, which has missed debt payments and is trying to complete a recapitalisation, according to three people familiar with matter.

Investment banks are also approaching other potential bidders with the firepower to take on the deal, said two of the people, who asked not to be identified as the matter is private.

Blue Label Telecoms agreed to buy a 45%stake in Cell C last year, but the deal has yet to be completed a week before the end-February deadline.

“The Cell C recapitalisation remains on track and is supported by the equity investors as well as the existing lenders to the business,” Karin Fourie, a spokeswoman for Cell C, said by e-mail on Tuesday.

“All lenders have expressed their support for this process, which remains ongoing.”

There’s no certainty that Telkom will make an offer. Representatives for Telkom and Blue Label declined to comment.

For Telkom, the former state landline monopoly, buying Cell C would help expand its mobile operations and better compete with South African market leaders Vodacom and MTN.

The Pretoria-based company, about 39% owned by the South African government, held talks with Cell C’s owner Oger Telecom in 2015 about buying the carrier but failed to agree a price. Telkom has been cutting jobs and investing in broadband and mobile to counter falling demand for landline services.

Johannesburg-based Blue Label planned to expand Cell C’s network and recapitalise its debt. That deal is opposed by CellSAf, a Cell C minority investor, last year filed a legal claim to block Blue Label’s bid, saying it would unfairly dilute its shareholding.  — (c) 2017 Bloomberg LP

12 Comments

  1. Oh please : No !
    Gov owns Telkom for 39%, while the PIC, supervised by treasury, keeps another 11.6%. So Gov Would then AGAIN hold a large part of the mobile market. It sold one or two years back for R26 Billion, incl discount Vodacom shares to the PIC in a somewhat underhand deal. TM and CC supervised from Luthuli House by Cwele and company.
    In the further past Telkom sold a large part of its VC shares and squandered the cash in a failed venture in NIgeria.
    Telkom might not have done no too badly with it’s 8ta/ Telkom Mobile, but customer service is not always great. They have closed so many Telkom Direct or CSBs, customer services outlets. And any way they were also not very useful, as they told you to call their call centre.
    Sipho Maseko might also want to close the CC outlets.

    Too bad that Orange seems to have completely withdrawn fro SA, and not interested in CC.

  2. Wait no longer:- 2017 will bring the exact same glide-path-to-ruination this sad little country has experienced for the past 22 years the under corrupt misrule of the ANC.

    One more or less cell phone deal is neither here nor there, as it’s Mugabestan that is the ultimate banquet of consequences since 1994. Sad but true.

  3. Ofentse Letsholo on

    Cell C is in need of money to remove their debt and grow their coverage so I think this is the year Telkom will be able to take its piece of the pie that’s if there’s no one opposing the deal like with CellSAf on Blue Label. I think this year Cell C will have a bit of a brighter year. Again let’s wait and see. Maybe Bill Gates should buy it 🙂

  4. Memo to CellC directors: Drop your call rates by 20%, your customer base would sky rocket and you would not need Billy Gates or anyone else to come to your rescue.
    It’s so simple, kids in primary school could work that one out.
    Primary school kids yes. Brian Molefe? No.

  5. CellC needs a good management. As a CellC user I will highly appreciate if this deal can go through. Telkom under Sipho Maseko is very focused and they need the customer base of CellC to expand. Furthermore, Telkom and CellC are using a similar technology from HUAWEI and it will be seamless to integrate the two networks.

    Finally, I so wish people can discuss facts and leave politics out. If you are fed up with South Africa just leave the country and stop mourning about every little thing.

  6. Cell C vulnerable to Telkom overtures
    According to a report some time ago CC had a total debt of R 20 Billion.
    Acc to a TC article of 7 Feb
    “Cell C downgraded after ‘missing payments’”Blue Label wanted to take over 45% of CC for 5.5 Billion. Putting the value of CC at R 12.2 Billion.
    Acc to an article in Business Day today :

    Cell C vulnerable to Telkom overtures , CC has a debt of R 23 Billion.

    Just some figures.

  7. Cell C needs good management : What could they have done better than acc to you ? They accrued massive debts under very difficult circumstances, laid down by ICASA, the incumbents Vodacon and EmptyN, which fixed the MTRs, and Gov.

    Yep, they should have switched to better data connections, 3G and LTE earlier, and might have made some other smaller mistakes.

    Tech : had a Chinese ZTE techie deployed by CC in my house once, back in 2011 or 2012 somewhere, to test my poor internet. Got the impression that CC was using ZTE stuff on their towers and base stations. But probably both, Huawei and ZTE.
    It is impossible to leave politics out of this, as politicians involve themselves continuously with things they know very little about. Or just because of narrow minded self interest and enrichment.
    No, we must not flee SA, we must fix this democratic country.

    “Don’t ask what the country can do for you, but ask what you can do for the country” – JFK 1961

    Mourning or moaning ?

  8. Yes, CellC needs good management indeed. There is still no CELLC products at Woolworths Stores nationwide. That’s a lack of marketing from the management. As you mentioned, it took them forever to switch to a high speed data connection. Eastgate, Kolonade, Carnival Mall just to mention a few malls there is no CellC coverage inside the malls.

    The list is endless and it’s all because of poor management. If you instruct HUAWEI to deploy their technology in a mall, they will do so very fast.

    At Nelspruit where I’m from, only the city has network coverage. Outside the city I’m roaming on Vodacom and it’s so difficult when roaming to access emails and other data demanding features.

    Thanks for the corrections on the spelling error.

  9. Cell C has withdrawn the agreement they had with Masstores (Game, Makro) to sell their products and services, as they feel they can make more money selling it in their own outlets. They have stopped working with franchisees running outlets, that did not make enough money.
    So very little chance they will sell their products through Woolies.

  10. No more ANC in business? In conflict! Everything the government touches turns to dust! Dumber and dumb! Always trying to build monopolies or nationalize! Socialisim is dead!