MTN, Telkom said to hold talks with advisers on possible deal

MTN Group, Africa’s largest wireless carrier, is considering reviving talks to acquire smaller South African rival Telkom SA, according to people familiar with the matter.

Telkom has also been talking to advisers about its options if a new takeover bid is launched, said the people, who asked not to be identified because information is still private. The two companies could begin negotiations before the end of the year, though there’s no guarantee that these talks would lead to a deal, they said.

Representatives for MTN and Telkom declined to comment.

MTN walked away from early negotiations to buy Telkom in 2022 after the two disagreed on exclusivity and amid concerns about winning antitrust approval for a deal that would have created South Africa’s dominant mobile phone operator. Telkom’s shares have risen more than 40% since those earlier talks were called off and the company is valued at about R25 billion ($1.4 billion) currently.

Rival Vodacom Group secured a deal to take a stake in Remgro’s fibre business after years of negotiations with South Africa’s competition authorities. The decision gave MTN confidence that it could potentially also get approval to combine with Telkom, said the people.

South Africa’s government is pushing to secure better connectivity for the country and boost investment in rural areas. The telecommunications industry has argued that this is only commercially viable if infrastructure isn’t duplicated.

To bolster its deals capacity, MTN has placed its Chief Financial Officer Tsholofelo Molefe – who is also a former Telkom executive – at the head of its mergers and acquisitions unit. A combination with Telkom could close the gap with rival Vodacom, South Africa’s market leader, controlled by the UK’s Vodafone Group Plc.

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