Like a shark that sniffs blood in the water, the telecommunications industry in South Africa finds itself in a similar situation as Telkom appears to be ripe for the taking, with data provider Rain as well as MTN looking to merge or take over the partially state-owned company.
Earlier this year, in July, MTN and Telkom told their shareholders that they had entered into a formal discussion about MTN buying Telkom.
Both companies said the discussions were about MTN acquiring the entire issued share capital of partially state-owned Telkom, in return for shares or a combination of cash and shares in MTN.
If the deal goes through, this means MTN will have to buy out the government as it holds a 40 percent stake in Telkom, while the Public Investment Corporation owns a further 14 percent of Telkom’s equity.
The companies said the discussions were at an early stage, and there was no certainty that the transaction would be consummated.
Last Thursday, however, Rain announced that Telkom should merge with them instead of being taken over by MTN.
Rain said it had made a formal request to present the Telkom board with a proposal which would ultimately result in the merger of the two companies.
Later on Thursday evening, the Takeover Regulation Panel (TRP) lashed out at the company, as the announcement was made without the panel’s approval. The TRP reports to the Minister of Trade and Industry. It regulates transactions that involve public companies.
Telkom also issued a statement on the Johannesburg Stock Exchange (Sens) on Friday. Telkom said it noted the media statement that was made by Rain.
“Telkom can confirm that no offer or proposal has been received from Rain. If an offer or formal proposal is received from Rain, the board of Telkom (‘the board’) will consider it in accordance with its legal obligations. Shareholders are further referred to the cautionary announcement issued by Telkom on 15 July 2022 in relation to discussions between Telkom and MTN Group Limited (‘MTN’) regarding MTN acquiring the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN.
“Those discussions are continuing and accordingly, shareholders are advised to continue to exercise caution when dealing in Telkom securities. The board accepts responsibility for the information contained in this announcement and, to the best of their knowledge and belief, such information is true and this announcement does not omit anything likely to affect the importance of the information included,” Telkom said in their statement.
Meanwhile, on the TRP matter, Rain has not withdrawn their statement yet.
Rain CEO Brandon Leigh told Business Times, the operator has sought legal advice and hoped to “engage constructively” with the TRP over the matter.
“Clearly, should our engagement with Telkom give rise to a potential transaction, we will fully comply with all legal obligations,” Leigh said.
BUSINESS REPORT