Cell C offices
Cell C offices in Midrand

Telkom has confirmed it is in talks to buy struggling mobile phone operator Cell C.

Cell C is 45% owned by JSE-listed Blue Label Telecoms, 15% by Net 1, 3 Special Purpose Vehicles (SPVs) collectively hold 30% (in turn held by 3C Telecommunications and further in turn held as 29.4% by the Employee Believe Trust, 45.6% by Oger Telecoms and 25% by broad-based black empowerment grouping CellSAf); and Cell C Management and Staff hold 10%.

“Telkom has substantially concluded its due diligence, however, discussions are at a preliminary stage,” the company informed investors on Friday.

The company, which is partially owned by the state said the potential acquisition will be subject to Cell C completing a financial restructuring to ensure that its gearing levels are reduced to a sustainable level as specified by Telkom and commercial contractual relationships are renegotiated to terms acceptable to Telkom.

“The potential acquisition will be subject to a number of regulatory approvals,” the company said.

If Telkom manages to buy Cell  C, the struggling mobile phone operator will add 22 million subscribers to the country’s biggest fixed-line telephone operator.

Blue Label Telecoms and Net 1 have written down to zero the value of their stake of the embattled mobile network, Cell C, which recently reported an R8 billion loss in the year to June, hit by impairments.

Cell C is unable to compete against bigger rivals, Vodacom, MTN and Telkom.

Its woes are having a negative impact on JSE-listed Blue Label Telecoms, which owns almost half of the mobile phone company.

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