MTN Group, the largest wireless carrier in Africa, is reportedly revisiting discussions to acquire its smaller South African competitor, Telkom. Sources familiar with the situation have indicated that Telkom is also engaging with advisers regarding its alternatives in light of a potential new takeover approach.
Negotiations between the two companies could commence before the year ends, although there’s no certainty that these discussions will culminate in an agreement. Representatives from both MTN and Telkom have declined to provide comments on the matter.
MTN previously exited preliminary talks to purchase Telkom in 2022 after the companies could not reach a consensus on exclusivity, and concerns arose about obtaining antitrust approval for a merger that would have produced South Africa’s leading mobile phone operator.
Since those negotiations stalled, Telkom’s stock has surged by over 40%, valuing it at approximately US$1.4 billion. Recently, Telkom’s shares saw a notable increase of up to 16%, marking the largest intraday rise since July 2022. In contrast, MTN’s shares fell by 0.8%.
Meanwhile, after lengthy negotiations with South Africa’s competition authorities, Vodacom Group successfully secured a stake in Remgro’s fibre business, instilling confidence in MTN that obtaining regulatory approval for a merger with Telkom might also be feasible.
The South African government advocates for improved connectivity nationwide and increased investment in rural areas. Industry stakeholders have argued that achieving this goal is only practical if infrastructure is not duplicated.
To enhance its merger capabilities, MTN has appointed its Chief Financial Officer, Tsholofelo Molefe, who has a background with Telkom, to oversee its mergers and acquisitions division.
A merger with Telkom could significantly narrow the gap between MTN and Vodacom, which is operated by the UK’s Vodafone Group and currently leads the South African market.
