MTN Mulls Acquisition of Rival, Telkom
MTN Group and Telkom recently announced that early-stage acquisition talks were ongoing. They also fore-warned stakeholders that there were no guarantees these talks would yield a deal. But...
- MTN Group and Telkom recently announced that early-stage acquisition talks were ongoing.
- They also fore-warned stakeholders that there were no guarantees these talks would yield a deal.
- But Telkom’s CEO said an offer is expected from MTN within the next few months.
Telkom’s Chief Executive Officer Serame Taukobong said his company is still awaiting an acquisition offer from MTN Group Limited.
According to Taukobong, a final acquisition offer is expected in the next few months. However, it’s unclear whether MTN would make the offer.
When the news first broke in July that MTN was interested in acquiring the smaller rival, both companies forewarned stakeholders that there was no guarantee of a deal at the end of ongoing negotiations.
Meanwhile, Business Insider Africa reported that the acquisition would be beneficial to MTN Group, bolstering its competition against arch-rival Vodacom Group.
Although MTN Group operates in over 20 countries and generates large portions of its group revenue from overseas, its presence on the home front is a little behind the shadows of Vodacom Group. Hence, the need to expand its South African market share. And a merger/acquisition would Telkom presents a prime opportunity to do that.
Buoyed by the cash proceeds from its recent divestment efforts, MTN Group has all it takes to acquire Telkom.
Thus far, there has been no mention of the exact cash consideration for the deal. However, there are speculations that it would be a stock/cash-and-stock arrangement.
If the deal is to pull through, there is one hurdle MTN Group may need to scale through. Analysts have pointed out that the deal would create a duopoly between MTN Group and Vodacom. And this would, in turn, raise concerns about fair competition in South Africa’s telecom industry. Therefore, MTN may have a tough job convincing regulators otherwise.
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