SA: MTN in bid to buy Telkom

MTN Group recently expressed an interest in acquiring Telkom, Bloomberg News reported on Sunday, citing unnamed sources “familiar with the matter”.

Telkom has so far rebuffed MTN’s proposals, the news wire said (paywall), and “it remains unclear” whether MTN will continue with its pursuit of its smaller rival.

MTN is said to have made a bid for Telkom on at least two occasions in the past, dating back at least a decade.

TechCentral learnt in May last year of an apparent informal approach by MTN to Telkom – the publication did not report on this at the time as it wasn’t able to determine the veracity of the information from a second source.

“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”.

TechCentral understands that MTN Group chairman Mcebisi Jonas is pushing for the deal to happen, though there is scepticism that it would pass regulatory muster.

Resistance

Any proposed transaction is likely to meet stiff resistance at the Competition Commission, which would have to approve it. 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.

Telkom has a market capitalisation of R28.6-billion. A successful offer would likely have to value the business at a premium to that figure. A deal would also require buy-in from government, which retains a 40% stake in the company. The Public Investment Corporation – the investment manager for public servants’ pensions – owns a further 14% of Telkom’s equity.