A disagreement over the value of Cell C has seen Telkom abandon its plans to buy its rival mobile operator after months of mounting excitement that South Africa's third and fourth biggest mobile operators may soon join forces.
JSE-listed Telkom, which is 40% government-owned, confirmed to the market yesterday that it and Cell C's majority shareholder, Oger Telecom, had called off negotiations for a possible sale.
"By mutual agreement, Telkom and Oger Telecom have ended all discussions related to the potential purchase of Cell C by Telkom," according to a Telkom statement to the media.
"Through Telkom's engagement with Oger Telecom in relation to Cell C, it has become clear there is a difference between the parties on the assessment of value of the proposed transaction."
For months, the market suspected Telkom was interested in buying its rival and Telkom finally confirmed about 10 days ago that it was in fact in negotiations and performing due diligence on Cell C.
Dubai-based Oger Telecom owns a 75% stake in Cell C and has not been coy about its openness to sell its shares in the South African operator if the price was right. Oger deputy CEO Mazen Abou Chakra told Business Day in August that multiple offers had been made for the stake.
Telkom's newest statement alludes to the fact that in the end it all came down to price, and because no agreement could be reached, the parties decided to end talks.
Telkom withdrew its 9 November cautionary announcement, which confirmed the discussions were taking place, and has advised shareholders that they no longer need to exercise caution when dealing in Telkom's stock.
The stock market reacted positively to the news and Telkom's share price closed 9% higher yesterday at R67.
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