JOHANNESBURG (Reuters) - South African fixed-line phone company Telkom (TKGJ.J) is yet to make an offer to buy control of mobile operator Cell C [SAOGRC.UL], its chief executive said on Monday, denying a report the company has had a $972 million bid rejected.
However, CEO Sipho Maseko indicated that he would pursue a deal to combine the third and fourth largest operators in the mobile market.
"I haven't had any offer rejected because I haven't made one," Maseko told Reuters. "I expressed an interest and I asked for due diligence. Based on the outcome of the due diligence, I will then be able to make an offer."
Bloomberg reported on Oct. 29 that Oger Telecom has rejected Telkom's 14 billion rand ($972 million) offer for its 75 percent stake in South Africa's number three wireless phone operator.
Telkom launched a mobile phone business five years ago to offset declining sales from its traditional operations. But that business faces a saturated market dominated by MTN Group (MTNJ.J) and Vodacom -- a unit of Britain's Vodafone (VOD.L).
"We are a number four player and Cell is a number three player, and we think that getting these two together will make us deeply competitive in the future and that is why we are keen to explore that opportunity," Maseko said.
Telkom is near the end of the first phase of a turnaround strategy that included cutting jobs, outsourcing services such as telephone directory printing and selling some properties.
Buying Cell C would give Telkom about 20 million mobile phone users but also a company facing a consumer backlash due to slow network speeds.
Cell C also labors under debts of 160 million euros ($178 million) and last year agreed a restructuring with bondholders, involving a three-year maturity extension to July 2018.
Telkom reported a 14 percent increase to 280.6 cents in headline earnings per share in the six months to end September helped by cost cuts and a robust showing in its mobile phone business.
"We are pleased with the improved performance of our mobile business and our multiyear cost efficiency program and will continue with these initiatives to bring about further improvements," Maseko said.
Shares in the company jumped 6.46 percent to 62.92 rand as of 0847 ET, outpacing a 1 percent rise in the JSE All-share index .JALSH.
Reporting by Tiisetso Motsoeneng; Editing by Keith Weir