Mobile operator MTN may be mulling the idea of taking a stake in rival Telkom, according to a report published on Monday.
Citing three sources “familiar with the negotiations”, Bloomberg, a news agency, says MTN has “considered taking a stake” in the formerly fully state-owned telecommunications provider. The agency does not name the three sources.
The speculation is contained in a report that says South Africa’s government is likely to sell its 13,9% stake in Vodacom, currently worth R28bn, to provide assistance to Eskom.
An MTN spokesman tells TechCentral that the mobile operator does “not comment on speculation around mergers and acquisitions”. A Telkom spokesman was not immediately able to comment.
According to previous reports, government may also be considering its options with regard to its 39,8% stake in Telkom, though selling this stake would prove more difficult than offloading its Vodacom shares because of likely resistance from trade unions. Government’s stake in Telkom is worth R14,5bn at Monday’s share price of R69,77/share.
If MTN is eyeing a stake in Telkom, it would mark a significant development in discussions, which have been taking place for the past year between the two companies, over a closer working relationship.
In terms of those talks, it’s proposed that MTN will take over management of Telkom’s radio access network, the wireless part of its mobile network that connects consumers to its base stations. The two companies are also looking to expand their roaming agreement so that each operator’s users will be able to roam on the other’s network.
Until now, the two have had an agreement under which Telkom paid MTN to roam on the latter’s 2G and 3G voice and data networks.
“The conclusion of an agreement will allow us to expand our mobile coverage and reduce our operating costs and capital expenditure significantly,” Telkom CEO Sipho Maseko said at the time the talks were first announced.
Telkom has said it needs to reduce the costs associated with building South Africa’s fourth mobile network operator significantly to offset losses.
Speculation about MTN possibly taking a stake in Telkom comes as Vodacom lobbies regulators for approval of its proposed R7bn acquisition of Neotel. Both communications regulator Icasa and the Competition Commission have to give the green light for that transaction to proceed.
Telkom was trading up by 0,4% in midafternoon trading on the JSE on Monday at R69,95/share; MTN was trading up by 2,4% at R206,84/share. — (c) 2015 NewsCentral Media