No Cell C, China Mobile deal on the cards: sources

Multiple sources close to Cell C have rubbished a report that China Mobile is about to strike a deal to buy a stake in the troubled South African mobile operator.

A report earlier this week by ITWeb quoted an unnamed source — who it said had “knowledge of the matter” — that talks were taking place between Cell C and China Mobile and that a deal between the two companies was “imminent”.

However, several well-placed sources have told TechCentral that no deal is on the cards with the giant Chinese telecommunications operator. It’s not clear if there were ever talks between them.

Cell C continues to be engaged in discussions with MTN South Africa about an expanded roaming agreement, the details of which are expected to ironed out in the coming weeks. According to one well-placed source, other South African mobile operators have shown an interest in Cell C, but discussions with MTN remain exclusive until the end of November, precluding the company from detailed engagements with other parties.

Bloomberg, meanwhile, reported on Thursday that Cell C has put core parts of its business up for sale as it struggles with a turnaround effort.

Spectrum sale?

Those assets, the news wire said, include its fibre-optic network — presumably a reference to its fibre Internet service provider business as the company doesn’t own fibre-to-the-home infrastructure.

Bloomberg said Cell C is also in talks to sell “wireless frequencies” to MTN, though if that’s happening it’s difficult to see how it will pass regulatory muster as spectrum trading is not allowed under existing legislation.

What may be more likely is that some sort of spectrum management arrangement is reached, where Cell C continues to own the spectrum, but the asset is managed on Cell C’s behalf by MTN.

Cell C CEO Douglas Craigie Stevenson hinted at such an arrangement in an interview (paywall) with the Financial Mail this week. He said the MTN deal will “entail substituting capital expenditure for operational expenditure and allowing us to compete on the basis of having the same geographical footprint and quality of service”.

The FM quoted Craigie Stevenson as saying that the new roaming deal will result in MTN carrying Cell C’s network traffic, making it more akin to a mobile virtual network operator.  — (c) 2019 NewsCentral Media