South Africa’s Telkom (JNB:TKG) is preparing a lowball bid for perennial target Cell C. The ailing incumbent is willing to pay a maximum of…..
South Africa’s Telkom (JNB:TKG) is preparing a lowball bid for perennial target Cell C.
The ailing incumbent is willing to pay a maximum of R18bn (US$1.29bn), while the target’s Dubai-based parent, Oger Telecom, is seeking R22bn (US$1.58bn), according to a Bloomberg report.
After this summer’s decision by South African competition body CompCom to block MTN and Telkom’s proposed network sharing agreement, and a previous attempt to merge with MTN also failing, Telkom is no closer to meeting the government’s universal broadband access targets by 2020, say advisers.
Questions remain around the viability of the long-discussed Cell C deal, which was described by Telkom CEO Sipho Maseko as an “interesting proposition” in August.
Following the merger of Neotel and Vodacom, Telkom is the country’s last remaining independent fixed-line player. Telkom also has a very small mobile network, which would be significantly boosted with the acquisition of Cell C.
In mobile, the market is led by Vodacom and MTN, although Cell C has shown major improvements in network quality and customer satisfaction, according to a local consultant.
“I’d like to do something with [Cell C]…at the right price, I’m a buyer,” Maseko said.
Oger Telecom, meanwhile, has said it has received approaches from six potential buyers for Cell C. Goldman Sachs and Houlihan Lokey have been conducting the strategic review of Cell C on behalf of Oger.
Suitors are thought to be both local and international, as well as strategic and financial. Depending on how the ongoing bilateral talks progress over coming weeks, it is thought that the board will make a call on whether to take any offers forward.
