MTN Group Ltd recently made a takeover approach for Telkom SA SOC in a deal that would\u2019ve combined South Africa\u2019s second and third largest telecommunications operators, according to people familiar with the matter.<\/p>\n
Telkom has so far shown no interest in a sale, said the people, who asked to remain private as the talks are confidential. It remains unclear whether the larger rival will continue its pursuit, the people said.<\/p>\n
\u201cThere is no deal on the table in relation to this matter,\u201d MTN said in a statement after Bloomberg inquiries, declining further comment. A representative for Telkom didn\u2019t immediately comment.<\/p>\n
Following a multi-year asset-disposal program, MTN is flush with cash and looking to build on its core business. A combination with Telkom, which has a market value of $1.9 billion, would help close the gap with crosstown rival Vodacom Group Ltd. MTN\u2019s shares have risen more than 177% this year, valuing it at about R314.7 billion ($21 billion).<\/p>\n
Last week, the two parties agreed on a multi-year roaming agreement, where Telkom uses MTN\u2019s network. There are also certain alignment in their company strategy as MTN is busy with a sale-and-leaseback deal of its South African towers, and Telkom is separating its towers business to prepare it for a possible listing of the unit.<\/p>\n
With over 40% owned by the state, Telkom controls South Africa\u2019s largest landline network and also sells mobile-phone packages among other services. Telkom\u2019s other large shareholder is state-owned pension fund manager the Public Investment Corporation that holds 14% of the company, according to Bloomberg data. For a deal to ever get the go-ahead, there would have to be government support and a number of competition issues would have to be worked on, said the people.<\/p>\n
Johannesburg-based MTN has been paying debt at a rapid rate as it disposes of non-core assets, that also includes the phased sell-down of a stake it holds in recently listed IHS Towers, the sale-and-leaseback of its South African towers and exiting certain Middle Eastern operations.<\/p>\n
MTN is Africa\u2019s biggest mobile phone company with about 272 million subscribers, according to its website.<\/p>\n