South Africa: Vodacom In Talks About Deal With Cell C -Reports

17 January 2020

Mergers, Acquisitions and Financial Results

Vodacom is reported to be in talks with Cell C about taking over the smaller rival’s contract-paying mobile customers, a move that would significantly strengthen its position as South Africa’s telecoms market leader, according to people who are familiar with the matter.

Vodacom would gain more than one million paying subscribers from the agreement, said the sources, who asked not to be named as the meetings are on-going. The talks are reportedly at an early stage and could still fall apart.

Cell C and its majority shareholder, Blue Label Telecoms, are exploring ways to cut costs and make more money as they battle to service a mountain of debt. Transferring the subscribers to Vodacom would attract revenue and free Cell C from the cost of servicing subscribers, according to the sources.

Philip Short, an analyst working for Old Mutual, said that if such an arrangement were to be inked, it would most probably have to first go through the Competition Commission, but if it is approved it could go a long way in decreasing Cell C’s debt.

Vodacom has approximately 5.8-million post-paid subscribers in South Africa, meaning a successful agreement with Cell C would see it fly past MTN with 5.9-million and would increase its overall lead in the country’s telecoms market.

In November, Cell C turned down a takeover offer from Telkom that would have merged South Africa’s third- and fourth-largest cellphone operators.

Source: Business Live