A shopper walks past a Telkom shop at a mall in Johannesburg. Picture: REUTERS/SIPHIEW SEBEKO
A shopper walks past a Telkom shop at a mall in Johannesburg. Picture: REUTERS/SIPHIEW SEBEKO

The potential tie-up of Cell C and Telkom could boost the government’s plans to increase connectivity to all citizens, analysts said on Wednesday.

It emerged this week that Telkom might make another bid for Cell C, which was downgraded in January by ratings agency Standard & Poor’s for missing payments to creditors. Cell C is already in discussions with Blue Label, which wants to buy 45% of the business.

The government, which owns 39% of Telkom, wants every citizen to have access to broadband coverage and services in the coming years.

Anesu Charamba, team leader for information and communication technologies (ICT) at Frost & Sullivan Africa, said the government would gain a significant presence in the mobile market, which could be used to increase connectivity to all citizens, especially in rural areas.

He said he believed the Independent Communications Authority of SA would not have a problem approving of this deal, as this would ensure that all three operators were on the same level of competition in terms of subscriber base, capital and spectrum.

Naila Govan-Vassen, senior ICT analyst at Frost & Sullivan Africa, said the transaction would boost Telkom’s footprint in the mobile market.

Telkom already owns a mobile network business, Telkom Mobile, but it is smaller than Cell C.

The deal would push the combined unit’s market share to about 30%, and offer competitive mobile services to enterprises and consumers, said Govan-Vassen.

"Offering services beyond fixed-line services would lay the foundation for Telkom to provide quad-play services in the long term, which many of the global players are already exploring," she said.

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