Telkom Group CEO Serame Taukobong said he has zero interest in buying smaller rival Cell C, making it clear that no deal will happen on his watch.
Telkom is understood to have made at least one serious approach to Cell C about a deal under the leadership of Taukobong’s predecessor, Sipho Maseko, who stepped down last year. Ultimately, no agreement could be reached between the parties.
Asked by TechCentral on Thursday if he’d be interested in making another approach to Cell C and its shareholders, Taukobong said emphatically: “No, thank you!
He joked that “Brett can keep his problem”, referring to Brett Levy, co-CEO of Cell C’s largest shareholder, JSE-listed Blue Label Telecoms, who has helped lead a recapitalisation of the debt-burdened operator. Blue Label bought a 45% stake in Cell C in 2017 for R5.5-billion, but it has since written down the carrying value of the investment to nil.
Cell C’s secured lenders are set to vote on a compromise offer this month.
“The bondholders will be required to legally indicate their consent to the offer — of 20c for every R1 of debt — by means of a vote. A majority of at least 75% of the vote in favour of the offer is necessary for it to be implemented,” Cell C explained in a statement in May.
The listed bonds or notes (US$184-million worth) make up a portion of Cell C’s overall debt of R7.3-billion owed to secured lenders. The meeting with noteholders will take place on 20 June, where the compromise offer will be tabled for a vote.
Last year, Telkom overtook Cell C to become South Africa’s third largest mobile operator by subscribers thanks to solid demand for its data-led packages.
Taukobong told TechCentral that Telkom now has sufficient bulk to be able to keep up and compete effectively with market leaders Vodacom and MTN, especially in the data market, which is the company’s focus.
“What we look at is share of data revenue, and 70% of our revenue comes from data. Voice still dominates a lot of [MTN and Vodacom’s] revenue share. So, for us, it’s saying, how do we increase our scale in data market share, because that’s been our strength?”
He said Telkom’s recent acquisition of spectrum – it spent R2.2-billion buying 20MHz in the 800MHz band and 22MHz at 3.5GHz – has positioned the company well to continue to grow in mobile data services market.