Telkom and Rain have walked away from a transaction that could have seen the JSE-listed telecommunications operator buying the wireless broadband upstart.

The news sent Pretoria-headquartered Telkom’s shares soaring higher in lunchtime trade in Johannesburg on Wednesday on investor expectations that the collapse of the talks could rekindle an approach by the partially state-owned company’s rival, the Johannesburg-based MTN Group.

Telkom’s shares were last quoted at R36.20, up 11.8% on the session.

MTN and Telkom had been in preliminary discussions, but the former walked away when the latter indicated it was willing to engage in a discussion with Rain about a deal. Although MTN had said it was not after exclusivity in the talks, company insiders felt having Rain involved in discussions would unnecessarily complicate what would already be a difficult deal to get across the line.

Telkom advised its shareholders on Wednesday that the talks with Rain, which involved the potential acquisition of Rain for newly issued shares in Telkom, would not proceed. “After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time,” it said.

Both parties had agreed to continue discussions until end-December, by which time they would decide whether to engage in more serious talks about a combination of their businesses.

Read: MTN quits talks to buy Telkom

Rain had pitched a deal as a more logical combination than one involving MTN and Telkom.

“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.