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

SA's smart city finalists win big for innovation

South Africa's City of Johannesburg's Smart City Office has awarded four innovators R500,000 (US$31,434) for their innovative solutions.

Story

Hot startup of the month: Data science marketplace Zindi

This month's hot startup is social enterprise Zindi, which is a professional network for data science in Africa.

More Innovation hub

Latest video

More videos

Guest Perspectives

Story

Omdia View: May 2022

By Omdia Analysts

SpaceX-owned Starlink's plans to launch a satellite broadband service in Africa was a major highlight in May 2022, says Omdia's analysts.

Story

Omdia View: April 2022

By Omdia Analysts

This month's Omdia View highlights indicate a shift to digital transformation and operational consolidation to maximize return on investments.

More Guest Perspectives

Partner perspectives

All Partner Perspectives

Flash poll

All polls

Archived webinars

Africa Green ICT: Lighting Up a Sustainable Continent

The ICT industry is the leading industry in the commitment to carbon neutrality, whose focus has shifted from setting ambitious targets to taking initiatives. The push for zero-carbon and for green energy development, it isn't just about CSR – it's also good for sustainable business.

The path to sustainable development requires green energy. Governments are looking at potential policy approaches to make green energy more widely available and affordable. Without sustainable energy, there will be no digital transformation and no chance of making Africa more economically competitive in the post-pandemic era.

Africa Green ICT Webinar 2022 will bring together ICT industry leaders and senior industrial analysts to provide insight, best practices and key learnings on how to achieve zero-carbon targets and practice green development in Africa.

More Webinars

Sponsored video

More videos

AfricaCom perspectives

Story

Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.

Story

Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.

Story

How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up