China Mobile reported to be in talks to buy Cell C

October 8, 2019 Siyabonga Mtangana

A report on Tuesday suggested China Mobile may be about to swoop to the rescue of embattled mobile operator Cell C. Telkom is also rumoured to be circling.

ITWeb, an online technology publication, citing an unnamed source who it said has “knowledge of the matter”, said that talks are taking place between Cell C and China Mobile and that a “deal is imminent”.

TechCentral could not immediately independently determine the veracity of the report, but has heard from several sources in recent weeks that Telkom may again showing some sort of interest in Cell C. Telkom CEO Sipho Maseko had said earlier this year that company was no longer interested in buying the company.

If the ITWeb report is correct, and China Mobile does buy a stake in the operator – and especially a controlling stake — it could have a significant impact on the South African mobile market, particularly in light of the Chinese company’s deep pockets, technical expertise and buying power.

In response to a query from TechCentral, Cell C said: “We cannot comment on behalf of Telkom or China Mobile. Cell C will keep the door open to any conversations that will assist the company’s future viability.”

China Mobile, which is ultimately owned by the Chinese government, is the world’s largest mobile operator by subscribers. However, the company hasn’t expanded aggressively outside its home market.

The scale of its operations in China is eye-watering: as at 31 December 2018, it serviced total connections of more than 1.6 billion, had almost 460 000 employees and had annual revenue of 736.8-billion yuan (R1.6-trillion).

Its businesses primarily consist of mobile voice and data business, fixed broadband, and other information and communications services, according to its website.

R8-billion loss

The China Mobile speculation comes less than two weeks after Cell C said it had reported an R8-billion net loss for the 12-month period to 31 May 2019, much of which was the result of impairments.

Cell C is in advanced discussions with potential funders, led by the Buffet Consortium, with a view to recapitalising the business and repairing its distressed balance sheet.

Chief financial officer Zaf Mahomed said in a recent interview with TechCentral that the company hopes to have the recapitalisation deal concluded before the end of the year.