Telkom, MTN talks drag on

Telkom and MTN South Africa remain in discussions regarding the potential extension of their existing roaming agreement, almost a year after the parties first came together.

The deal would include bilateral roaming and outsourcing of the operation of Telkom´s radio access network, which if successfully concluded may have a material effect on the price of Telkom’s securities, the telco said in a statement on Thursday (12 February).

“The parties will update shareholders as soon as they receive the appropriate legal and regulatory approvals,” Telkom said.

MTN signed an agreement with Telkom in March 2014, which would see it take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network (RAN).

In April last year, Telkom said it hoped to conclude the deal within three to four months.

According to Reuters, sources said in December 2014 that the government was considering selling its shares in Vodacom and Telkom as part of its funding strategy for ailing power utility, Eskom.

However, Bloomberg reported that a Telkom sale is unlikely, partly because it would face opposition from labour unions.

Bloomberg said that MTN was interested in buying into Telkom, citing three people with knowledge of the negotiations.

An acquisition of government’s Telkom stake by MTN would, apart from union opposition, also face scrutiny by the Competition Commission.

In July last year, the Public Investment Corporation (PIC) increased its stake in Telkom to 13.25%, from 10.61%, while the government of South Africa has a 39.76% stake in the telco.

This meant that government’s overall holding in Telkom is 53% as the PIC is wholly owned by government, with the Minister of Finance as shareholder representative.

Telkom’s share price has risen as much as 366% over the past two years, to R75.75 in morning trade on the JSE, giving the group a market cap just shy of R40 billion.

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Telkom, MTN talks drag on