Wireless broadband operator Rain said on Wednesday that it remains engaged with Telkom about a proposed acquisition.
This comes after Telkom and MTN Group told investors earlier in the day that their proposed deal – which would have seen MTN buying Telkom in a cash and share deal – was off the table.
Rain has since proposed that Telkom buy it, creating a “formidable third player to compete with what is effectively a duopoly in South Africa”.
“It 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 has said previously.
MTN had wanted exclusivity in its discussions with Telkom, and when it wasn’t able to secure this promise, it decided to walk away. TechCentral understands MTN wanted exclusivity because the deal was already going to be highly complex and difficult to get across the line without other parties complicating matters.
MTN’s decision to terminate the discussions could now play in Rain’s favour, which had already muddied the waters by announcing soon after news of the MTN/Telkom talks surfaced that it planned to approach Telkom’s board about a deal.
On 30 September, Telkom told investors that its board had received a non-binding proposal from Rain on 14 September and that it was evaluating it. The move prompted a terse response from MTN, which said in its own statement to shareholders that it had written to Telkom’s board seeking clarification, presumably on the issue of exclusivity.
Though Rain wasn’t saying much on Wednesday following the collapse of the MTN/Telkom talks, a spokeswoman told TechCentral via e-mail: “As Rain has stated previously, we reiterate that we believe there is a compelling business case for combining Rain and Telkom… Rain is not able to share any further details on the proposed transaction at this time.” — © 2022 NewsCentral Media