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MOBILE WARS

South Africa’s landline monopoly wants to be the country’s third largest mobile network

Reuters/Mike Hutchings
A billion people don’t have an official identity—and therefore can’t have a mobile phone in their own name.
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Telkom, the telecommunications company which has a monopoly on South Africa’s fixed-lines, is mulling a deal which could make it the country’s third largest mobile network.

This week, after months of speculation, Telkom expressed its interest in buying Cell C, South Africa’s third largest mobile network. Back in February, Telkom’s CEO, Sipho Maseko, hinted the company would look into acquiring Cell C if it came on the market ;at the right price.

Telkom, launched its own mobile business  five years ago. But Telkom Mobile—the fourth largest mobile network in the country—hasn’t been able to grow its mobile subscribers substantially enough to compete with the three larger mobile networks in South Africa: Vodacom, MTN and Cell C.

Data from the 2014 annual reports of South Africa’s four largest networks show how Telkom dwarfs behind the three major players.

As mobile phones have become popular, fixed-line revenues have been declining for Telkom, which is part-owned by the South African government with a 39% stake. In an interview with Bloomberg, Telkom Chairman, Jabu Mabuza, said that the acquisition of Cell C may be part of the company’s solution to grow its mobile businesses. “Our business is one that needs scale, so we’ll continue to look for opportunities,” said Mabuza.

Acquiring Cell C might not be a straightforward deal for Telkom.

Oger Telecom, the Dubai-based company which owns a 75% stake in Cell C told South Africa’s Business Day that six groups had approached the company to buy its majority stake in Cell C. Names suggested included France’s Orange, which entered South Africa’s market in 2013 through a online portal and retails stores; Britain’s BT Group; China Mobile; the UAE multinational, Etisalat, India’s Bharti Airtel—the world’s third biggest mobile company which has struggled in some African countries.

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