Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

4G/5G

Is Telkom About to Snap Up Cell C?

Article Image
Telkom SA announced a significant dip in earnings for the fiscal first half of the year but the operator's latest financial report was overshadowed by news of "discussions in relation to a potential acquisition, which if successfully concluded, may have a material effect on the price of the company's securities."

Telkom didn't identify its target but all signs point to troubled mobile operator Cell C, which is proving a burden for significant shareholder (45% stake) Blue Label Telecoms, which recently wrote down its investment in Cell C to zero after South Africa's number three mobile operator reported a significant net loss. (See Blue Label Gets Real About Cell C and Cell C Puts Brave Face on Massive Loss.)

Such a move would represent meaningful consolidation in a mobile market dominated by Vodacom, which has nearly 44 million subs in SA and which just announced a leap in profits, and MTN, which has nearly 29 million customers in the country. (See Vodacom Half-Year Profit Jumps 19% and MTN Group Grows, SA Struggles.)

Cell C has about 16 million customers, which, if added to Telkom's 11.5 million mobile customers, would make Telkom a challenger to MTN for the number two mobile market share position in South Africa.

Telkom has been doing pretty well by itself in terms of growing its own mobile customer base, having increased its cellular customer base by more than 75% in the 12 months to the end of September. Indeed, the operator noted that mobile service revenues, which increased by almost 57% year-on-year to R5.6 billion (US$377 million), were the main driver of its sales growth during the six months to the end of September.

Overall, Telkom's fiscal first-half operating revenues were up by 4.7% to almost R21.5 billion ($1.45 billion) "despite the weak economic environment." But Telkom's headline earnings per share (HEPS) dipped by 36% due to a number of costs and charges and revaluations, and its net debt leaped to 15.8 billion, giving it a net debt to EBITDA ratio of 1.4, compared with a ratio of just 0.8 in March this year. Telkom said that debt pile growth was due in part to a change in accounting methods but also due to increased capital expenditure on its mobile infrastructure: Any acquisitions would only worsen its debt position.

The operator has also been investing in its home broadband infrastructure, and recorded a 30% increase in the number of consumer home broadband subscribers to just over 2 million, the majority of which are connected using fixed wireless access (FWA) technology.

Ray Le Maistre, Editor-in-Chief, Light Reading for Connecting Africa.

Innovation hub

Story

Four agritech startups to watch in 2024

Connecting Africa has compiled a list of four agritech startups that are making a difference in the communities they serve.

Story

Paymentology looks to strengthen its African roots

Global issuer-processor Paymentology's CEO Jeff Parker spoke to Connecting Africa about the company's African roots and aspirations to work with more banks, fintechs and enterprises both on the continent and globally.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Industry announcements

More Industry announcements

Upcoming events

Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

Omdia View: February 2024

By Omdia Analysts

Highlights in February 2024 in the Middle East and Africa included 5G launches in Senegal and 5G trials in Egypt as well as Kenya's first 5G MVNO. Airtel also launched a new wholesale connectivity business while MTN and Huawei are planning a joint Innovation Technology Lab in South Africa – that and more in this month's Omdia View.

Story

Omdia View: January 2024

By Omdia Analysts

Highlights in January 2024 in the Middle East and Africa included a $200 million fintech deal between MTN and Mastercard as well as 5G network trials by Telecom Egypt – that and more in this month's Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002