South Africa: Telkom Mobile MD claims ‘No sense in Cell C deal’

Mergers, Acquisitions and Financial Results

Telkom MD Attila Vitai says that a hypothetical deal between Telkom and Cell C, that would see the former acquiring the latter, would not make sense for Telkom. This came in response to comments made by Cell C CEO Alan Knott-Craig on Talk Radio 702 in July, who was addressing talk of consolidation in the telecoms industry.

Speaking to Stephen Grootes on the radio station, the Cell C head confirmed that the mobile operator had addressed talks of consolidation with Telkom Mobile.

Vitai says that a deal between the two operators would only make sense for one of them – Cell C – while it would simply move Telkom Mobile “from a loss-making fourth operator to a loss-making third operator”.

Vitai - reportedly speaking in his personal capacity – indicated that Cell C has been trying to “do a deal with Telkom” since he started at the company.

“Their exit strategy is to sell to us or someone else. The investors want to exit and Knott-Craig is anxious to do a deal,” Vitai told TechCentral.

“The business is not really profitable and has huge debts. From Telkom’s perspective, I’m not sure [an acquisition] makes a great deal of sense.”

Knott-Craig has long said that there is no room for four mobile operators in South Africa, and that consolidation between firms was inevitable.

“Margins are thinning and smaller operators’ ability to compete is being hampered by lack of scale,” he previously told BusinessTech.

However, Vitai is of the opinion that consolidation in the form of merging with Cell C would not substantially alter Telkom Mobile’s strategic positioning in the market.

“We need time to leverage the competitive advantage that we have in terms of spectrum,” Vitai said. “We are growing our data customer base and revenues…We need time to do that.”

Previously, both former Telkom CEO, Pinky Moholi, and current CEO, Sipho Maseko, dismissed claims that the company was looking at a merger deal with Cell C