Telkom has confirmed it is in talks to buy mobile network operator Cell C. 

"Telkom has substantially concluded its due diligence, however discussions are at a preliminary stage," it said in an update to shareholders on Friday. 

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

Telkom did not provide further details, but did say the potential acquisition was subject to regulatory approval.

On Tuesday Bloomberg reported that a tie-up between Cell C and Telkom’s mobile-phone division would create a business with about 22 million subscribers.