According to Bloomberg News, sources “familiar with the matter” have said that the MTN Group has expressed an interest in acquiring Telkom. These discussions have been ongoing for quite some time, it turns out, but Telkom have refused MTN’s proposals up until now. These sources have said that “it remains unclear” whether MTN will continue with its pursuit of its smaller rival.
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This isn’t the first time MTN have made a bid for Telkom, either. The big yellow machine has made a bid for Telkom on at least two different occasions, the first time being more than ten years ago.
“Telkom has so far shown no interest in a sale, said the people, who asked to remain private as the talks are confidential,” Bloomberg News reported. Telkom reportedly told the news wire that “there is no deal on the table in relation to this matter”. According to TechCentral, MTN Group chairman Mcebisi Jonas is pushing for the deal to happen, though there is scepticism that it would pass regulatory muster.
Any such transaction will obviously need to go through the regulatory scrutiny from the Competition Commission. It is expected to be a big hurdle, as there are already few options for South African to choose from in the telecommunication market and could raise some monopolistic flags. Communications regulator Icasa would also have to be involved in giving the green light to a deal that could be seen to reduce competition in South Africa’s telecommunications industry.
At current share prices Telkom is valued at R28.6 billion, but a sale would likely need to be at a significant premium to that price. Of course, the South African government still owns about 40 percent of Telkom and would also need to green light the transaction. PIC – the Public Investment Corporation – owns another 14 percent of the company.
