Telkom South Africa, had a dream of merging with rival mobile operator, Cell C, has come to an end. There have been talks of these giant mobile operators joining forces, but due to the fixed-line operator failing to agree on a price with Cell C’s majority owner, Oger Telecom, these talks have ended and no merger will be taking place.
Telecom called off the negotiations, stating that it was a mutual agreement between Cell C and Telkom, and that “it has become clear there is a difference between the parties on the assessment of value of the proposed transaction.”
Telkom shares gained 8% to R66.40 at 4.17pm on the JSE, valuing the Pretoria-based company at R35bn. The stock has fallen 4.6% this year, compared with a 4.7% gain on the FTSE/JSE Africa all share index. Buying Cell C would have given Telkom about 20-million mobile phone users but it also would have given them a company facing a consumer backlash due to slow network speeds.
Cell C reportedly sought to expand its mobile-phone unit to offset a decline in landline use in Africa’s most industrialised economy.
Oger Telecom, who is based in Dubai, owns a 75% stake in Cell C and has previously been quite open about wanting to sell its shares in the South African operator if the price was right.
Many offers were made in the past, but in the end, an agreement could not be reached and negotiations were ended.
Cell C is South Africa’s third-largest mobile phone company with 22 million customers. Telkom’s wireless unit is the country’s fourth biggest.
The stock market has apparently reacted positively to the news of negotiations ending, and Telkom’s share price closed 9% higher recently at R67.
After Telkom South Africa Failed with their own mobile network (8ta), maybe it’s a good idea that they didn’t buy Cell C.