MTN responds to Telkom report on Rain talks

 ·30 Sep 2022

Mobile operator MTN on Friday (30 September) responded to a statement from Telkom relating to an offer from data network provider Rain that Telkom purchase the group.

Telkom said in a statement on SENS that it had received the offer from Rain in mid-September.

“Shareholders are advised that Telkom received a non-binding proposal from Rain on 14 September 2022, in terms of which Rain proposes the potential acquisition of Rain by Telkom for newly issued shares in Telkom,” the company said in a SENS announcement on Friday.

The company said its board was evaluating the Rain proposal and was not yet in a position to express a view on the matter.

In a statement of its own, MTN – which is currently also in discussions with Telkom over a potential buyout that would see MTN acquiring the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN – said its board has addressed a letter to the board of Telkom containing its thoughts on the matter.

“The board of directors (Board) of MTN has considered the pre-closing statement issued by Telkom in which it refers to a non-binding proposal that Telkom has received from Rain.

“Based on such announcement, the Board of MTN has addressed a letter to the Board of Telkom containing MTN’s comments thereon. When MTN receives a response from Telkom, a further announcement will be released by MTN, setting out its position with regards to the future of the transaction,” it said.

The group advised shareholders to continue to exercise caution when dealing in the company’s securities until a further announcement is released.

MTN initially announced talks to buy Telkom in July in a deal that would create the biggest South African mobile-phone operator by number of subscribers, noted Bloomberg. The move faces antitrust hurdles as it would create an effective duopoly, a challenge Rain said would not be an issue under its plan, it said.

Bloomberg also reported in August that the South African government received an unsolicited bid for its 40.5% stake in Telkom, following the announcement from MTN.

Investment firm Toto Consortium made an offer valued at $433 million for the stake in Telkom, according to Bloomberg calculations. The Telkom bid is based on a 30-day average share price of the firm, plus a 20% black empowerment discount, according to an offer letter seen by Bloomberg.

There are no plans to sell the government’s stake in Telkom “at the moment,” communications minister Khumbudzo Ntshavheni said at the time. “Should this situation change, we will communicate.”

Toto is part of a consortium that controls a 24% stake in Richards Bay Minerals, majority owned by mining giant Rio Tinto.

Shares in MTN were trading at around R120 in the afternoon session on the JSE, having slipped from a high of around R208 in April

Telkom, meanwhile, has seen its shares climb steadily since July amid all the speculation.

Read: Rain to target mobile play

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