Bloomberg says that MTN Group’s plans to buy South African mobile network operator Telkom SA have been put on hold because data-only mobile network operator Rain wants to merge with MTN Group.
Following Bloomberg’s report, Telkom shares fell as much as 16% since April 2020 and were trading 10% lower at 11:12 a.m. in Johannesburg. This puts the company’s value at around R22 billion (US$1.2 billion). MTN’s share price changed a little.
A fortnight ago, Telkom said that it had received an offer from Rain that was not binding. Under the terms of the deal, Telkom would buy Rain, and Rain would get shares in Telkom. The company also said that the Rain proposal is being looked at by its board.
Rain said at first that it planned to give the Telkom board a formal proposal in August. However, that proposal was halted before it reached the Telkom board. Rain was ordered by South Africa’s Takeover Regulation Panel (TRP) to retract the announcement, claiming that the company issued it without the TRP’s prior approval, as required by the Companies Act.
According to Bloomberg, a Telkom spokesperson referred to the company’s October 4th statement, which stated that both parties were still considering MTN’s proposal and that shareholders should exercise caution.
If the deal between MTN and Telkom goes through, a new company would be formed that would be the largest mobile operator in South Africa regarding subscribers. It would be more significant than MTN’s current competitor, Vodacom.