MTN weighs options including merger talks with Telkom – report

Under fire mobile operator, MTN has held talks with Telkom over a possible merger, according to a report in the Sunday Times.

Both companies are dealing with major internal woes.

MTN is under immense pressure after Nigerian authorities demanded the group pay back over $10 billion – $8.1 billion in alleged aunathorised dividend expatriation, and a further $2 billion fine related to back-taxes.

Although the group has denied both claims, the crisis has wiped almost a third off its share price.

Telkom meanwhile, is currently in the middle of yet another round of retrenchments, and is offering voluntary packages to staff “as part of a review of its business operating model”.

It said in an email to staff earlier this month that it has subsidised the local mobile industry by about R70 billion since its inception. “This subsidy has mainly been a result of regulatory decisions that impacted Telkom disproportionately,” stated the email.

“During these regulatory cycles Telkom has sought to safeguard jobs from market and economic pressures. However, the cumulative effect of past regulations continues to impact our business operations.”

MTN has seen its market cap drop to R150 billion, while Telkom’s market cap is about R25 billion.

The former also currently has a roaming agreement with rival operator, Cell C.

Any deal of this magnitude however, would be hard pressed for approval from the competition authorities and regulatory bodies.

The report in the Sunday Times said that MTN is also reviewing operations in its 23 territories due to regulatory burdens.

Read: Telkom details voluntary separation packages in an email to staff

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MTN weighs options including merger talks with Telkom – report