TELECOMS: MTN’s plan to buy Telkom collapses, market reaction harsh

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MTN’s now-failed acquisition of Telkom was always going to be difficult to get across the line. The government, which owns 40.5% of Telkom, and the Competition Commission would have to approve the deal. MTN wanted exclusivity in merger talks, which ...

The negative market reaction came in thick and fast. Telkom’s shares fell by as much as 24% on Wednesday, wiping R6.9-billion from its value on the JSE. And MTN’s share price fell by as much as 4%, with the telecommunications giant joining the ranks of the biggest share losers of the day.

In late September, Rain tabled a formal proposal to merge its operations with that of Telkom. The potential Rain-Telkom merger would create a telecommunications company with enough scale, radio frequency spectrum , and network infrastructure to challenge MTN and Vodacom. The selling point for a Rain-Telkom merger is that both companies would pour more capital and investments into rolling out new-age and high-speed data services such as 4G and 5G.

“Discussions were at an early stage and had not progressed to due diligence, nor had a binding offer been received by the Telkom board of directors,” Telkom added.

 

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