There appears to be light at the end of the tunnel for the botched MTN/Telkom merger deal as the Telkom CEO Serame Taukobong is quoted as saying that the partially state-owned telecommunications operator is open to further conversations with MTN Group about a transaction.
This comes a month after MTN terminated discussions about an MTN-led proposal to buy Telkom after Telkom said it was entertaining an offer from small rival Rain.
Taukobong, responding to a question at Telkom’s interim results investor presentation on Wednesday, said the talks with Rain remain informal in nature, though the parties have agreed to decide whether it’s a “go or no-go position” before the end of December.
The strategic rationale [for a deal] remains intact, and we are open to further conversations if MTN comes back
On MTN, the Telkom CEO said: “The strategic rationale [for a deal] remains intact, and we are open to further conversations if MTN comes back [to the table].”
Announcing the end of the discussions with MTN last month, Telkom said the talks hadn’t progressed beyond an early stage, that no due diligence had taken place and that MTN had made no binding offer to Telkom’s board.
In a separate statement to investors, MTN said at the time: “After extensive engagements and deliberations between the parties, shareholders are advised that the discussions regarding the proposed transaction have terminated, as the parties were unable to reach agreement to their mutual satisfaction on the process going forward.”
An acquisition by MTN of Telkom would have very high regulatory hurdles to clear, diminishing its chances of success. Not only would there have to be difficult discussions around the pooling of the two companies’ spectrum assets, but the Competition Commission would also likely launch an in-depth probe into such a deal and its likely impact on competition in South Africa’s telecoms industry.
Analysts said MTN is likely most keen to get access to Telkom’s wholesale business, Openserve, which has an extensive fibre network into homes and businesses. Asked at Wednesday’s investor presentation whether Telkom would consider selling the whole of Openserve, Taukobong said: “It is a core asset for us. We are definitely not considering selling a majority of Openserve.”