Telkom SA SOC Ltd. has offered to buy Cell C Pty Ltd. and merge South Africa’s two smallest mobile network operators in an effort to better compete against larger rivals, according to sources close to the matter.
The bid reportedly includes a strategy to pay off Cell C’s debt and renegotiate contracts with its suppliers.
The sources say that Telkom wants to take over the running of Cell C’s business.
The new development comes just as Cell C explores options with the MTN Group and local investors to recapitalise the business, which may include the sale of a number of its assets.
Cell C has confirmed that talks with MTN are at an advanced stage. The struggling mobile operator declined to comment on Telkom.
Cell C’s spokeswoman, Jacqui O’Sullivan said that at this time Cell C would explore any opportunity that would assist with the company’s long-term viability. She did, however, add that all opportunities would need to undergo a process that takes into account all of Cell C’s stakeholders.
On Tuesday, last week, Telkom revealed that it is in talks around a potential acquisition but did not identify the target. This is the third time that the firm is trying to acquire Cell C after the target instead opted for a recapitalisation with Blue Label Telecoms Ltd., which now owns 45% of Cell C.
According to research analyst, Alastair Jones, a merger of Cell C and Telkom’s mobile-phone division would create a company with about 22 million subscribers.
The new amalgamated entity would pose a more significant threat to the dominance of South Africa’s two leading operators, Vodacom and MTN, which boast about 70 million subscribers in the country.