One of South Africa’s biggest mobile operators, which is partially owned by the government, said on Friday it is evaluating a proposal submitted by data-only provider, Rain.
The telecommunications company is being pursued by not only Rain, but also MTN.
In July, MTN and Telkom told their shareholders they had entered into a formal discussion about MTN buying Telkom.
Then, in August, Rain made a formal request to present the Telkom Board with a proposal that would, if accepted, ultimately result in a merger of the two companies.
The 40.5% up for grabs from Telkom is estimated to be worth R7 billion.
Rain hoped the merger would create a “5G powerhouse" in South Africa. The company is advocating for a third player to compete against a "telecommunication duopoly" in South Africa.
Rain, was, however, slapped on the wrist for making their proposal public after the Takeover Regulation Panel (TRP) said the merger announcement was sent without its approval.
In a JSE Sens statement on Friday, Telkom announced the receipt of a non-binding proposal from Rain.
“Shareholders are advised that Telkom is proceeding with its strategy to unlock value for its shareholders, underpinned by the view that the Telkom share price does not reflect Telkom’s intrinsic value. The Telkom Board of Directors ("Telkom Board"), conscious of economic and market dynamics and in accordance with its legal obligations, is considering various strategic options, including non-binding merger and acquisition proposals received to date,” Telkom said in its statement.
“Further to the SENS issued by Telkom on 12 August 2022, shareholders are advised that Telkom received a non-binding proposal from Rain on 14 September 2022, in terms of which Rain proposes the potential acquisition of Rain by Telkom for newly issued shares in Telkom ("Rain Proposal"). The Telkom Board is evaluating the Rain Proposal and is not yet in a position to express a view thereon,” Telkom said.
Following Telkom’s announcement, the other company involved, MTN has since released a statement of their own on the matter.
MTN said, “Shareholders of MTN are referred to the cautionary announcements issued by MTN on the Stock Exchange News Service of the JSE Limited dated 15 July and 22 August 2022 in relation to MTN and Telkom SA SOC Limited (Telkom) entering into discussions relating to MTN acquiring the entire issued share capital of Telkom in return for shares or a combination of cash and shares in MTN (the Transaction).”
“The Board of directors (Board) of MTN has considered the announcement issued by Telkom in which it refers to a non-binding proposal that Telkom has received from Rain. Based on such announcement, the Board of MTN has addressed a letter to the Board of Telkom containing MTN’s comments thereon. MTN received a response from Telkom, advising that it will respond to the MTN letter more fully in due course. A further announcement will be released by MTN, setting out its position with regards to the future of the Transaction. In the meantime, shareholders are advised to continue to exercise caution when dealing in the Company’s securities, as this could have a material effect on the share price of MTN,” MTN further said.
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