By Loni Prinsloo
(Bloomberg) – Cell C rejected a takeover offer from Telkom, leaving the South African mobile carrier clear to pursue a cooperation pact with larger rival MTN and a recapitalisation plan with the Buffet Group.
Telkom said Friday it received written notice from the Cell C board rejecting the non-binding proposal. Cell C favoured a deal with Buffet, a local investment firm, together with the benefits of a roaming agreement, people familiar with the matter said.
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“The Telkom board continues to believe the offer is a compelling proposition that would have created significant value for all stakeholders including Telkom’s shareholders,” the company said in a statement. The stock rose as much as 5%.
The former fixed-line monopoly was seeking to buy Cell C and combine the nation’s third-largest mobile-network operator with its operations to better compete against dominant players Vodacom and MTN. Telkom’s proposal would’ve helped Cell C reduce its debt, on which it has already missed payments. Instead, Cell C is banking on the roaming deal with MTN to lower its costs.
Cell C’s $184m of bonds, which are due in August next year, are quoted at about 38 cents on the dollar, down from 96 cents at the beginning of August, according to data compiled by Bloomberg.
