Telkom Group CEO Serame Taukobong has stated that the telecom operator has no interest in buying rival Cell C, making it clear that no deal will happen in the future.
Taukobong’s predecessor, Sipho Maseko, had reportedly made one serious approach to Cell C about a potential partnership, but ultimately, no agreement could be reached between the parties.
JSE-listed Blue Label Telecoms has helped lead a recapitalisation of the debt-burdened Cell C.
In 2017, Blue Label bought a 45 per cent stake in Cell C for US$3.4 million, but it has since written down the carrying value of the investment to nil.
Cell C’s secured lenders are expected to vote on a compromise offer this month.
The telecom operator explained in a statement that, “The bondholders will be required to legally indicate their consent to the offer — of 20c for every R1 of debt — by means of a vote. A majority of at least 75 per cent of the vote in favour of the offer is necessary for it to be implemented.”
The listed bonds (US$184 million) comprise a portion of Cell C’s overall debt of US$4.6 million owed to secured lenders.
According to the operator, the meeting with bondholders will take place on 20 June, where the offer will be tabled for a vote.
Last year, Telkom surpassed Cell C to become South Africa’s third-largest mobile operator by subscribers due to solid demand for its data-led packages.
Taukobong revealed that Telkom had sufficient bulk to keep up and compete effectively with market leaders MTN and Vodacom, especially in the data market, which is the company’s primary focus.
“When looking at the share of data revenue, 70 per cent of our revenue comes from data. Voice still dominates much of [MTN and Vodacom’s] revenue share. So, we had to ask ourselves, how do we increase our scale in data market share given that it’s our stronghold?”
Taukobong added that Telkom’s recent spectrum acquisition –in the 800MHz band and 22MHz at 3.5GHz – has positioned the company well to continue growing in mobile data services.