Under fire mobile operator, MTN has held talks with Telkom over a possible merger, according to a report in the Sunday Times.<\/p>\n
Both companies are dealing with major internal woes.<\/p>\n
MTN is under immense pressure after Nigerian authorities demanded the group pay back over $10 billion \u2013 $8.1 billion in alleged aunathorised dividend expatriation, and a further $2 billion fine related to back-taxes.<\/p>\n
Although the group has denied both claims, the crisis has wiped almost a third off its share price.<\/p>\n
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”.<\/p>\n
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,\u201d stated the email.<\/p>\n
\u201cDuring 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.\u201d<\/p>\n
MTN has seen its market cap drop to R150 billion, while Telkom’s market cap is about R25 billion.<\/p>\n
The former also currently has a roaming agreement with rival operator, Cell C.<\/p>\n
Any deal of this magnitude however, would be hard pressed for approval from the competition authorities and regulatory bodies.<\/p>\n
The report in the Sunday Times said that MTN is also reviewing operations in its 23 territories due to regulatory burdens.<\/p>\n