Telkom is considering acquiring Cell C’s debt as it seeks to gain access to subscribers of the nation’s third largest mobile phone company.

Cell C creditors approached Telkom to help reorganise debt that includes €640m (R8,8bn) of bonds maturing in July 2018, said the people, who asked not to be identified because discussions are private.

Telkom, whose attempts to start talks were rejected by Cell C this week, is trying to gain access to the company’s financials ahead of a possible offer, one of the people said.

Creditors to Cell C include Industrial and Commercial Bank of China, China Development Bank, the Development Bank of Southern Africa and Nedbank, according to the people. DBSA and Nedbank declined to comment, while ICBC and China Development Bank didn’t immediately respond to e-mailed requests for comment.

Telkom said it won’t comment on market speculation, while Cell C declined to comment.

Cell C’s board this week rebuffed an offer from Telkom and said it would rather pursue an existing recapitalisation plan with Blue Label Telecoms, which is seeking to take a 45% stake in the wireless carrier for R5,5bn. Cell C, which according to Standard & Poor’s Global Ratings has missed interest payments on senior secured notes and unrated debt instruments, needs to finalise the Blue Label deal by Tuesday.

Gaining Cell C would help Telkom expand its mobile operations to compete against Vodacom and MTN. Depending on the outcome of a due diligence process, Telkom would consider putting in as much as $1bn, people familiar with the matter said this week.

While some of the lenders have signed the Blue Label recapitalisation agreement, the bigger Chinese creditors have not yet done so, according to two of the people. Blue Label dropped as much as 5,2% to the lowest level since June on a closing basis. Telkom pared earlier losses to trade 0,9% lower by 3pm in Johannesburg on Friday.

The deal is opposed by CellSAf, a Cell C minority investor which last year filed a legal claim to block Blue Label’s bid, saying it would unfairly dilute its shareholding. Cell C management and staff will subscribe for 25% of the company and 3C Telecommunications will hold the remaining 30% of the total issued share capital by injecting R16bn. 3C is 75% owned by Dubai-based Oger Telecom and 25% by CellSAf.