Didata’s London-listed shares jumped 8% and its JSE-listed stock rose 3,25%, before slipping back to a final trade of 540c, up 20c on the day. Telkom’s shares rose to R167 before closing at R164,45, up 135c on the day.

The shares rose after Telkom CEO Papi Molotsane said that he had met some of Didata’s shareholders because “we need to acquire a company with IT skills and knowledge”.

But Molotsane’s comments came as perturbing news to Didata’s corporate finance director, Patrick Quarmby.

“We know absolutely nothing about it and I doubt he has talked to our shareholders,” Quarmby said. “We are not looking to be taken out and certainly not by Telkom. I’m pretty sure that if he was speaking to any of our shareholders we would have heard about it.”

The company’s financial performance was on the way up and it had no wish to be bought out, he said.

It was possible Molotsane had spoken to Didata SA’s chairman, Andile Ngcaba, the former director-general of the communications department, about working together on projects in Africa. That would be only at operational level and would not involve an equity deal, Quarmby said.

Not only is Ngcaba chair of Didata, he also heads the Elephant Consortium, which holds a 6,6% stake in Telkom.

Telkom is anxious to acquire an IT player to broaden its range of data services as its traditional revenue from voice calls comes under pressure. Didata was a possible target, said Molotsane.

“We are weighing our options on who to work with … Didata is an option. I have met with some of their shareholders,” he said.

With 1,34-billion shares in issue, Didata has a market capitalisation of about R7,2bn.

Its main shareholders are Allan Gray, Old Mutual Asset Managers and Sanlam Investment Management.

A marriage between Didata and Telkom could be uncomfortable, however, as they have long been at loggerheads. Didata’s Internet Solutions subsidiary in particular has worn a path to the courts, the Competition Commission and the Independent Communications Authority of SA, accusing Telkom of anticompetitive behaviour.

The rows have included Telkom’s bandwidth pricing practices and its efforts to stop rivals from offering various voice and data services.

Telkom aims to broaden its products and services quickly by taking over a rival player rather than piecing those skills together in-house.

Late last year its bid to take over Business Connexion failed when Telkom bid far less than Business Connexion was holding out for. Molotsane said Telkom would restart those talks if Business Connexion was willing to budge on price.

Telkom’s 2005 annual report showed R1,1bn in cash. It has chalked up major profit growth in recent years after slashing more than half its workforce and reaping dividends from its 50% in cellular operator Vodacom.

But revenues at its core fixed-line business are on the wane and it needs to branch out into providing converged data, voice and video services, analysts say.

Molotsane also scotched industry talk that Telkom might cede its lucrative Vodacom shares to Britain’s Vodafone, which paid a hefty premium to raise its stake to 50%.

Some industry sources have speculated that Telkom might sell its stake to Vodafone and try to buy another cellular operator such as MTN or Cell C. But Molotsane said Telkom and Vodafone could work together to grow Vodacom. With Reuters