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Cell C buy would make sense for Telkom

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Reports have surfaced today that Telkom is might be looking to acquire Cell C for R13-billion – and analysts believe there is a lot of merit in such move.
Naila Govan-Vassen, senior industry analyst: ICT at Frost & Sullivan Africa, comments: “Telkom’s potential acquisition of Cell C has been a part of their strategy since 2015; during that year a proposed merger between the two entities got cancelled as a result of differences regarding the assessment of the value of the transaction.
“This transaction would give Telkom the opportunity to expand their footprint in the mobile market, adding to their Telkom Mobile unit. It would push the combined unit’s share of the subscriber market to around 30% of the market, and offer competitive mobile services to enterprises and consumers.”
Offering services beyond fixed line services would lay the foundation for Telkom to provide quad-play services in the long-term, which many of the global players are already exploring, Govan-Vassen adds.
“Their strategy somewhat mirrors what British Telecom, which dominated the fixed line market, have done in the UK with its acquisition of Everything Everywhere. The move would see Telkom better-placed to compete against Vodacom and MTN in the consumer space.”
Anesu Charamba, team leader: ICT at Frost & Sullivan Africa, adds: “Being a part state owned enterprise (SOE), this will ensure that government gains a significant presence in the mobile market, which could be leveraged to increase connectivity to all citizens, especially in rural areas.
“ICASA may not have a problem approving of this deal, as this will ensure that all three operators are in the same level of competition in terms of subscriber base, capital and spectrum.”
Charamba points out that a similar strategy has been employed by traditionally B2B-facing MNOs, such as BT, whose acquisition of Everything Everywhere Limited in 2016 gave them the largest mobile subscriber base in the UK market.
“This acquisition could serve Telkom in a similar fashion in increasing their access to customer and consolidating their market position.”