Rain courts Telkom with merger talk – MyBroadband

Rain has formally requested to present the Telkom board with a proposal to merge the two companies, MyBroadband reports.

“Although the terms of such a transaction — such as valuation and structure — would still need to be agreed, Rain believes there is a compelling business case in combining the businesses,” the company said.

Rain said a merger would create a 5G powerhouse and a strong third player to compete with the Vodacom and MTN “telco duopoly”.

It said there is a strong business case for a Telkom-Rain merger and that it offers a more pro-competitive alternative than the government selling Telkom to MTN.

MTN advised its shareholders in July that it had entered into discussions to acquire the entire issued share capital of Telkom in return for shares or a combination of cash and shares.

MTN said discussions were at an early stage and there is no certainty that the transaction will be consummated.

“The transaction, if concluded, may have a material effect on the price of the company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until a further announcement is made,” MTN said.

Telkom confirmed the discussions in a separate statement issued to shareholders.

The deal is likely to face intense scrutiny from the Competition Commission and other regulators given the size of the two companies and their dominance in the sector.

MTN currently has 34.5 million subscribers, making it the second largest mobile operator behind Vodacom. Telkom has 16.9 million mobile subscribers.\

Read: MTN reports earnings jump amid strong customer growth

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