South Africa’s Telkom Says Cell C Has Rejected Takeover Offer

South African telecoms company Telkom SA (TKGJ.J) said on Friday its takeover bid for Cell C had been rejected, a move that comes after its larger but troubled rival expanded a roaming agreement with African giant MTN Group.

Seeking to become a mobile-focused business, Telkom has tried to buy Cell C in the past. This month South Africa’s No. 4 carrier made another approach as Cell C’s debt woes raised questions over how it would survive.

“Telkom has received written notice from the Cell C board of directors rejecting its non-binding proposal,” Telkom, which is 40% owned by the state, said in a statement.

“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.”

Cell C, the nation’s No. 3 carrier and majority owned by Blue Label Telecoms (BLUJ.J), confirmed it had declined the offer.

“Cell C will consider all offers which take the full value of Cell C into consideration,” the company said in a statement.

Blue Label declined to comment.

The deal with MTN will see an existing agreement, which gives Cell C access to MTN’s network in some areas of the country, expanded nationwide.

Telkom has also been grappling with its own debt problems after hefty investments to gear its operation toward newer technologies like mobile and fiber.

The mobile unit is now the star performer of its business, whereas customer numbers in previously big profit drivers like fixed line are falling.

The mobile unit grew revenues by almost 57% in the six months to Sept. 30.―Reuters