The Cell C board has rejected Telkom's move to acquire the financially constrained mobile operator.
This comes after industry speculation that Telkom was considering a R13 billion bid for Cell C, SA's third biggest mobile operator.
The reports came amid Blue Label Telecoms being in an advanced stage to buy a 45% stake in Cell C for R5.5 billion as part of a planned recapitalisation of the company.
Yesterday, neither Telkom nor Cell C would confirm to the deal, with the former's spokesperson Jacqui O'Sullivan saying: "We do not comment on industry speculation and rumour."
Blue Label was also coy on Telkom's interest in Cell C, saying: "We'll revert to the market by the end of February 2017. We are on track, with Blue Label's interim results due out next Tuesday, 28 February 2017."
However, today in a statement, Mohammed Hariri, chairman of Cell C, responds to the various articles that have been published in the media this week, concerning a potential offer from Telkom to purchase Cell C.
"The board has the responsibility to be transparent and keep staff, customers and stakeholders informed regarding this media commentary. The board can confirm that it has received an unsolicited, non-binding and conditional proposal from Telkom Limited in respect of Cell C.
"Cell C's board of directors would like to confirm that Cell C has already entered into legally binding agreements in terms of which it has committed to a recapitalisation transaction with, among other parties, Blue Label Telecoms Limited.
"Among other things, Cell C has undertaken to not enter into any agreement, incur any obligation or take any action which may restrict it or any of its affiliates from complying with its obligations under such agreements or which could result in the transactions envisaged in such agreements not proceeding to completion."
Hariri notes Cell C has every intention of complying with its obligations under such agreements.
"The board has, therefore, informed Telkom Limited, following a board meeting on Wednesday, that it is unable and not willing to pursue any discussion and has rejected its proposal."
This is not the first time Telkom has been linked with SA's third mobile operator. In November 2015, Telkom confirmed what the market had suspected for months: that it was in talks to buy its rival.
However, a disagreement over the value of Cell C saw Telkom abandon its plans. JSE-listed Telkom, which is 40% government-owned, confirmed to the market that it and Cell C's majority shareholder, Oger Telecom, had called off negotiations for a possible sale.
Blue Label's proposed recapitalisation of Cell C will reduce the telco's net debt to approximately R8 billion and enable it to continue to deliver on its growth strategy in a sustainable manner.
Earlier this month, S&P Global Ratings lowered its long-term corporate credit rating on Cell C to 'D' (default) from 'SD' (selective default) after the mobile network missed an interest payment.
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