MTN Group has recently decided to buy South Africa’s Telkom, Bloomberg reported, however, Telkom has so far shown no interest in a sale, while it remains unclear whether the larger rival will continue its pursuit, the sources said.
As such, Telkom has so far rejected MTN’s proposals, and “it remains unclear” whether MTN will continue with its pursuit of its smaller rival.
South African multinational mobile telecommunications company is said to have made a bid for Telkom on at least two occasions in the past, dating back at least a decade.
TechCentral took notice in May last year of an apparent informal approach by MTN to Telkom, however the result of such approach has been not up to the standards.
“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 said that “there is no deal on the table in relation to this matter”.
In parallel, 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.
Any proposed transaction is likely to meet strong resistance at the Competition Commission, which would have to approve it. Communications regulator, Icasa, would also have to be involved in granting approval 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, in addition to having a deal requiring buy-in from government, which retains a 40 percent stake in the company.
It is worth mentioning that the Public Investment Corporation – the investment manager for public servants’ pensions – owns a further 14 percent of Telkom’s equity.