MTN has responded to the potential Telkom takeover of Rain – could it scupper the high profile merger? On Friday, MTN issues a statement to investors through the JSE’s stock exchange news service. In the public statement MTN notes it has written to Telkom’s board about Telkom’s announcement that it was considering a proposal tabled by Rain.
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The MTN board has “considered the announcement issued by Telkom in which it refers to a non-binding proposal that Telkom received from Rain and that based on such announcement, the board of MTN has addressed a letter to the board of Telkom containing MTN’s comments thereon. A further announcement will be released by MTN, setting out its position with regards to the future of the transaction,” MTN said, suggesting it is prepared to walk away from its talks to buy Telkom.
It isn’t known when these further announcements could potentially be made, but the curious statement from the MTN board alone leads us to believe that the merger is in a precarious position. The other intention of the statement could surely be a message to Telkom that MTN is not keen to have a long, messy, drawn-out process to finalise their merger. Throwing Rain into the equation will simply delay and complicate the merger process, which obviously is not what MTN is looking for here.
What made Telkom’s announcement of the Rain talks peculiar was the fact that it was announced two weeks after the proposal was reportedly received. Rain wants Telkom to acquire it, and on paper the deal would make a lot of sense. Telkom has struggled to penetrate the mobile market, but that could also potentially be solved by the MTN merger. However, Rain primarily focuses on fixed wireless networks, even though it is intending to push hard in the mobile data market as well, as recently announced.
