Telkom open to restarting merger discussions with MTN
• CEO says strategic rationale for talks still holds
Telkom has not shut the door on a potential tie-up with MTN, saying it is open to restarting talks to bring the two businesses together.
MTN, which made a bid to buy 100% of Telkom in July, withdrew its offer after rival operator Rain made its own approach to merge with the fixed-line operator.
“The strategic rationale for an MTN and Telkom conversation still holds. We would certainly not be violently opposed to an approach to reopen discussions and see if we can find common ground,” Telkom CEO Serame Taukobong told Business Day on Wednesday as the group reported a plunge in interim earnings.
At end-September, MTN issued a letter expressing displeasure at data-only network provider Rain tabling a formal, nonbinding proposal to merge with Telkom. It is estimated that a takeover of Telkom by MTN would have been worth R30bn.
The industry has been experiencing a wave of consolidation worldwide as companies look to combine forces instead of going it alone in building expensive telecom infrastructure. Local players, aware of these realities, are building their own deals to stay ahead.
Of the Rain approach, Taukobong said the company is yet to determine if a deal with the suitor, backed by businessmen Paul Harris, Michael Jordaan and Patrice Motsepe, is viable.
“The teams are working hand in glove to work out if any of the potential synergies are there between ourselves<” he said.
“We’re not at offer stage. We’re still building the story, looking at where the common footprints are and equally where there aren’t any.
“We intend, by the end of the year, to be at a ‘go’ or ‘no go’ decision. But for now, no firm binding offers are on the table,” Taukobong said.
Rain said a merger with Telkom would create a mobile network operator with enough scale, radio frequency spectrum and network infrastructure to challenge MTN and Vodacom.
This comes as Telkom reported its profit more than halved in its latest half-year
WHILE IT IS MULLING RAIN’S APPROACH, CEO SAYS COMPANY IS NOT OPPOSED TO RESUMING TALKS TO FIND COMMON GROUND
results to September as fixed, mobile and IT services revenue dropped and consumers migrated to new technologies such as fibre and LTE.
High inflation, interest rate hikes, advanced levels of unemployment, among other factors, have put consumers under pressure and weighed on consumer spending.
Earlier this week, Business Day reported that Telkom chair Sello Moloko, one of SA’s bestknown business leaders with more than three decades in the financial services industry, has been urged by the SA Reserve Bank’s Prudential Authority to step down at Telkom and focus his attention on Absa, which he also chairs.
Telkom shares, down 35% so far this year, were 2.26% weaker at R34.99 by the close of trade on Wednesday.