MTN mulls Telkom move – report

MTN is looking into the possibility of acquiring a majority stake in fellow South African telco Telkom in a bid to challenge the country’s dominant provider Vodacom, a Bloomberg report has claimed.

The report’s sources, apparently familiar with the matter, have said MTN has held discussions over a possible transaction over recent months but so far no decision has been made. Telkom, of which approximately 40% is owned by the state, has a a market value of $3.4 billion and owns the country’s biggest landline network.

Last month the South African government, which also has a 13.9% stake in Vodacom, indicated it plans to exit both telcos to raise $870 million to invest in energy group Eskom as part of a plan to build new power plants. Apparently the idea is to have the money pretty quickly by around mid-summer this year.

While MTN is the biggest operator in Africa with approximately 155 million mobile subscribers in total, in its home market South Africa it is behind Vodafone Group-owned Vodacom. Meanwhile Vodacom is currently waiting to have approval or otherwise for its bid for Noetel, the country’s second biggest fixed communications provider.

Telkom has been struggling for years, finally managing to stop revenue decline in 2014, and its management is imposing cash-saving measures in a bid to increase profits. The telco has been in network-sharing talks with MTN for almost a year now, but it could be these discussions have recently shifted up a notch.