Speculation around Telkom’s possible acquisition of Cell C was confirmed on Friday when it said it has made an offer to acquire SA’s third largest mobile operator.

Telkom has substantially concluded its due diligence, but discussions are still at a preliminary stage, the company said in statement.

Telkom said the potential acquisition will be subject to Cell C completing a financial restructuring to ensure its gearing levels are reduced to a sustainable level, as specified by Telkom, and commercial contractual relationships are renegotiated to terms acceptable to Telkom.

A BusinessLIVE report says if successful, the combination of Cell C and Telkom would create a strong competitor to Vodacom and MTN. Of the 95m active SIM cards in SA, MTN and Vodacom have 70m. Telkom said the potential acquisition will be subject to a number of regulatory approvals.

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However, the largest shareholders in Telkom and Cell C say they are in the dark about the details of the proposed tie-up.

Business Day reports the government said it has not been formally apprised of the deal, after a similar announcement by Blue Label on Friday. To get the deal approved, Telkom would likely need the buy-in of both its biggest investor, the government, and Blue Label, which holds 45% of Cell C.

The Department of Communications & Digital Technologies said it has not been informed of the deal.

‘When such plans are presented, and based on the context, the Ministry will accordingly apply its mind,’ the department said.

On Friday, Blue Label said its board ‘has not been formally apprised of any of the details regarding the Telkom proposal’.

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