It is no secret that MTN has been interested in acquiring Telkom for several years. Market talk has fingered this potential buyout for a long time, but it increased when MTN sold off large parts of its tower infrastructure. Now, MTN and Telkom have confirmed that MTN Group has entered into discussions to acquire Telkom, sending the latter’s share price much higher.
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While there have been murmurs and rumours regarding this potential deal for a long time, this is the first time the parties have entered into formal talks and notified shareholders about their discussions. “Discussions are at an early stage and there is no certainty that the transaction will be consummated,” MTN and Telkom said in separate statements issued via the JSE.
This could be one of the biggest corporate deals in South African history, so don’t expect it to go through anytime soon. There are still several hurdles that need to be cleared for it to happen, including getting the deal approved by various regulators, most notably, the Competition Commission and the Independent Communications Authority of South Africa.
Another potential stumbling block is the fact that government still has a 40 percent stake in Telkom, so they would need to agree to the sale as well. PIC – the Public Investment Corporation – owns another 14 percent stake in MTN and manages swathes of pensions of South Africans.
This will be the third time MTN will be making an offer for Telkom, with the first happening nearly a decade ago now. Telkom was also approached by MTN back in November, but the offer was declined. Since then, Telkom has replaced its CEO, with Serame Taukobong, a former MTN executive, taking the reins from Sipho Maseko.
At the time of writing, Telkom’s share price is sitting at R41.39, about 23.5 percent higher than on Friday.
