South Africa’s Telkom’s share price has been on the up again today, buoyed by yesterday’s collapse of the talks with Dubai-Based Oger Telecom to buy Cell C. By Staff Writer
On Thursday, Telkom shares jumped after acquisition talks with Oger Telecom to buy its stake in Cell C collapsed, ending concern the local firm would overpay to bulk up its mobile phone assets.
Telkom shares traded a 1.52% higher at R68.02 by midday on Friday as investors continue to digest news of the country’s incumbent fixed line operator calling talks off discussions with Oger Telecom to buy the country’s third biggest mobile phone operator.
“We believe Telkom has discovered some nasty issues when they were conducting their due diligence on Cell C assets and they used the price issue as a sticking point to avoid painting the company as a vulnerable asset,” said Cape Town analyst, who wanted to remain anonymous.
On Thursday, Telkom shares gained 9.96% at R67.58 giving the telco a market value of more than R34 billion after it announced on the JSE that talks with Oger Telecom to buy Cell C collapsed.
Market talk has suggested that Oger Telecom was asking a R20 billion price tag on Cell C.
Telkom said on Thursday talks to buy Cell C collapsed after not reaching an agreement with Oger Telecom on how to value Cell C.
By “mutual agreement” Telkom and Oger Telecoms said they have ended all discussions related to the potential purchase of Cell C by Telkom.
“Through Telkom’s engagement with Oger Telecoms in relation to Cell C, it has become clear that there is a difference between the parties on the assessment of value of the proposed transaction. As no agreement has been reached, Telkom and Oger Telecoms today agreed to end all discussions,” said Telkom in a statement.