The long-awaited merger of Telkom and Cell C is not to be, at least for now. This leaves Telkom as the distant fourth mobile operator, and Dubai-based Oger with a far-flung asset.
South African incumbent Telkom (JSE:TKG) has ended takeover talks with number three mobile operator Cell C. It was not willing to meet Dubai-based owner Oger Telecom’s R22bn (US$1.58bn) asking price after entering the due diligence phase.
When the two started talks, Telkom reportedly indicated that it was willing to pay a maximum of R18bn (US$1.29bn). CEO Sipho Maseko last week denied that his company had made a R14bn (US$1bn) offer for Oger’s 75% stake in the company.
Telkom first acknowledged that it had entered talks in late September, six months after Cell C went on the block. Oger had mandated Goldman Sachs and Houlihan Lokey.
In October, Telkom announced a functional separation of its network division, Openserve, saying that an open access approach would help the country meet the broadband connection targets set in 2013.
However, it has been suggested that Telkom will struggle to meet these objectives if it remains the distant number four mobile operator, which may have explained its interest in Cell C.
But the operator is also looking to satellite to boost coverage, having announced a partnership with Avanti Communications (LSE:AVN) earlier this month.
Telkom has said it has 2.2 million mobile subscribers, while Cell C had a reported 18 million at the end of 2014. South Africa has a population of 53 million.
Telkom’s talks with MTN over a proposed network sharing agreement fell foul of competition body CompCom this summer, while a previous merger attempt between the two also failed.