Johannesburg - Telkom is considering a bid of as much as
$1 billion for South African wireless operator Cell C, which has missed debt
payments and is trying to complete a recapitalisation, according to three
people familiar with matter.
Investment banks are also approaching other potential
bidders with the firepower to take on the deal, said two of the people, who
asked not to be identified as the matter is private. Blue Label Telecoms agreed
to buy a 45 percent stake in Cell C last year, but the deal has yet to be
completed a week before the end-February deadline.
“The Cell C recapitalisation remains on track and is
supported by the equity investors as well as the existing lenders to the
business,” Karin Fourie, a spokeswoman for Cell C, said by e-mail on Tuesday.
“All lenders have expressed their support for this process, which remains
ongoing.”
There’s no certainty that Telkom will make an offer.
Representatives for Telkom and Blue Label declined to comment.
Read also: Telkom Mobile shines in results
For Telkom, the former state landline monopoly, buying
Cell C would help expand its mobile operations and better compete with South
African market leaders Vodacom Group and MTN Group. The Pretoria-based
company, about 39 percent owned by the South African government, held talks
with Cell C’s owner Oger Telecomin 2015 about buying the carrier but failed to
agree a price. Telkom has been cutting jobs and investing in broadband and
mobile to counter falling demand for landline services.
Johannesburg-based Blue Label planned to expand Cell C’s
network and recapitalize its debt. That deal is opposed by CellSAf, a Cell C
minority investor, last year filed a legal claim to block Blue Label’s bid,
saying it would unfairly dilute its shareholding.