MTN Group has entered into discussions to acquire Telkom, the companies said on Friday. The news sent Telkom’s share price rocketing higher.

MTN has long been interested in Telkom, with market talk about discussions stretching back years. However, this is the first time the parties have entered into formal talks and notified shareholders about their discussions, suggesting the parties are warming to each other.

“Discussions are at an early stage and there is no certainty that the transaction will be consummated,” MTN and Telkom said in separate statements issued via the JSE.

Discussions are at an early stage and there is no certainty that the transaction will be consummated

Getting a deal of this magnitude over the line could prove exceptionally tricky. Even if approved, it is likely to come with onerous conditions attached by regulators, including the Competition Commission and the Independent Communications Authority of South Africa.

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A deal will also require buy-in from the government, which retains a 40% stake in Telkom. The Public Investment Corporation – the investment manager for public servants’ pensions – owns a further 14% of Telkom’s equity.

MTN approached Telkom as recently as last November, Bloomberg News reported at the time, though the offer was rebuffed. Since then, Telkom has replaced its CEO, with Serame Taukobong, a former MTN executive, taking the reins from Sipho Maseko.

MTN is said to have made a bid for Telkom on at least two occasions in the past, dating back at least a decade.

In May 2021 of an apparent informal approach by MTN to Telkom – the publication did not report on this at the time as it wasn’t able to determine the veracity of the information from a second source. MTN Group chairman Mcebisi Jonas was said to be pushing for the deal to happen, despite skepticism that it would pass regulatory muster.

Telkom had a market capitalisation of R17.1-billion as of Thursday’s market close. A successful offer would likely have to value the business at a significant premium.

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Telkom’s share price spiked higher on Friday’s news, and was last quoted 27% up at R42.50

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry