Talks of a buyout deal between MTN and Telkom have soured beyond the point of return. The deal was set to make MTN South Africa’s largest network operator, above Vodacom and Cell C. Talks apparently stopped due to MTN’s concerns about the deal not being exclusive between the two parties.
A potential Rain buyout is back on the table
In the aftermath of the deal’s termination, both parties have released statements regarding the matter.
“Discussions were at an early stage and had not progressed to due diligence, nor had a binding offer been received by the Telkom board of directors,” said Telkom in a statement made earlier this morning.
MTN released its statement shortly after, confirming the deal will not be proceeding:
“After extensive engagements and deliberations between the parties, shareholders are advised that the discussions regarding the Proposed Transaction have terminated, as the parties were unable to reach [an] agreement to their mutual satisfaction on the process going forward. Consequently, caution is no longer required to be exercised by shareholders when dealing in MTN securities.”
Since the deal’s termination, Telkom’s shares have fallen by 25% while MTN’s has dropped by 2%. MTN’s first sign of disdain came after Rain expressed interest in a similar deal with Telkom. A few months ago, Rain offered itself up for sale to Telkom. That proposal caused MTN to question its deal with Telkom.
People close to the deal claim that another source of worry was the issue of antitrust approval. If the deal were to go through, MTN would become the largest network operator in South Africa, leaving only three major operators left to compete with. The majority of users within the country use either MTN or Vodacom, which would leave the former with a sizeable chunk of South African mobile users.