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MTN and Telkom South Africa merger talks evaporate

Discussions between South African operators MTN and Telkom South Africa appear to have come to an end because ‘Telkom was not in a position to provide MTN with assurances around exclusivity’.

Reports about the potential consolidation in the South African market first emerged late last year, in which little birdies familiar with the matter whispered in Bloomberg’s ear that MTN Group had made a takeover approach for Telkom South Africa.

Statements by both firms appear to be saying that since Telkom couldn’t provide assurance that it wasn’t in talks with other firms about takeovers as well, MTM pulled the plug.

An MTN Corporate announcement reads: “After extensive engagements and deliberations between the parties, shareholders are advised that the discussions regarding the Proposed Transaction have terminated, as the parties were unable to reach agreement to their mutual satisfaction on the process going forward. Consequently, caution is no longer required to be exercised by shareholders when dealing in MTN securities.”

A similarly stiff statement from Telkom elaborated slightly: “MTN terminated discussions in relation to the MTN Proposal on 18 October 2022, as Telkom was not in a position to provide MTN with assurances around exclusivity. 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.”

The combination of the country’s second largest mobile operator with the owner of its largest landline network would have of course created a large very large operation, and possibly would have also had some regulatory heat because of this. One party that will be happy that the talks have apparently fallen through is Cell C, who would have been behind Vodacom in third place in the market, and would have looked a bit outgunned compared to the larger South African rivals.

 

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