Telkom refutes merger “offer” from Rain

Telecoms group Telkom has refuted the contents of a media statement by Rain that it had proposed for the two companies to merge.

Rain, a company backed by Patrice Motsepe, former FNB boss Michael Jordaan and OUTsurance co-founder Willem Roos, suprised the markets on Thursday when it said made a “formal request to present the Telkom board with a proposal which would ultimately result in the merger of the two companies.”

“It (Rain and Telkom merger) is a logical alternative to simply selling to MTN and would also be consistent with the pro-competitive policies of Government. The merger would bring together the considerable infrastructure and mobile businesses of Telkom and the
successful new age 4G and 5G businesses of rain,” Rain said.

However, Telkom which has already announced that it was in merger talks with MTN refuted Rain’s assertion.

“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,” Telkom said.

It then referred its shareholders to the statement it released last month that  in
relation to discussions between it and 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.”

Sunday World reported on Sunday that Fitch Solutions, a unit of the Fitch Group, said the proposed tie-up between MTN and Telkom is likely to face regulatory headwinds and does not see the deal going through in its current form.

The companies said MTN intends to acquire “the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN”.

“The upheaval in market dynamics that would occur in the event of MTN’s acquisition of Telkom will stimulate a substantial level of regulatory scrutiny and consequently we believe that a deal in its current form [MTN’s total acquisition of Telkom] will be denied by the Competition Commission,” Fitch said in a research note.

For the deal to go through, it would need buy-in from the government, which has a 40% stake in Telkom. Another significant player is the Public Investment Corporation (PIC), which manages public servants’ pensions.

The PIC has significant exposure on both sides, owning a 14% stake in Telkom, whose CEO is Serame Taukobong, and a 22% interest in MTN Group, which is headed by Ralph Mupita.



Kabelo Khumalo

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