Telkom in Talks to Buy South Africa Wireless Company Cell C

  • Telkom conducting due diligence on the mobile-phone company
  • Vodacom CEO sees stronger competitor in unified businesses

Telkom SA SOC Ltd. said it’s in talks to buy Cell C Pty Ltd., South Africa’s third-biggest mobile-phone company, an acquisition that would bolster the operator’s wireless unit as it seeks to offset declining sales from its larger, fixed-line business.

Telkom, 40 percent owned by the South African government, is carrying out due diligence and will update shareholders accordingly, the Pretoria-based company said in a statement on Monday. The shares gained 0.7 percent to 64.05 rand as of 9:32 a.m. in Johannesburg, valuing the company at 33.8 billion rand ($2.4 billion).

Cell C’s majority owner, Oger Telecom Ltd., has already rejected a 14 billion rand offer from Telkom for the Dubai-based company’s 75 percent stake, a person familiar with the matter said last month. Telkom operates South Africa’s fourth-biggest mobile-phone provider in a market dominated by two larger competitors, Vodacom Group Ltd. and MTN Group Ltd.

“A combination of the two players makes a stronger player,” Vodacom Chief Executive Officer Shameel Joosub said by phone on Monday. He declined to say whether he supported or opposed the transaction on an anti-trust basis.

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