MTN Group halts acquisition plan for Telkom, after Rain offer threatened deal

Acquisition discussions between network providers MTN Group and Telkom have fallen through because of disagreements between the two businesses over how to proceed with the transaction.

Telkom refused to grant MTN Group’s request for exclusivity in the agreement that would have made the y’ello network the largest telecom company in South Africa.
Recall that Telkom and MTN Group were in negotiations when MTN Group announced its intention to buy Telkom in July 2022. However, because MTN Group was not granted exclusivity in the deal, other companies were free to submit their own bids.

This implies that any entity interested in also acquiring Telkom will have to compete with MTN Group. Rain, a competitor in the market, has already made a bid that puts MTN’s offer in jeopardy.

On Wednesday, Telkom said the deal had fallen through as a result of the company not assuring MTN exclusivity. It was gathered that MTN terminated discussions on Tuesday.

“MTN terminated discussions in relation to the MTN proposal on 18 October as Telkom was not in a position to provide MTN with assurances around exclusivity”, the statement from the firm reads.

“Discussions were at an early stage and had not progressed due to diligence nor had a binding offer been received by the Telkom board of directors.

“The Telcom board has a legal and fiduciary duty to consider all bonafide offers”, Telkom said, adding, “Shareholders are, therefore, advised that they no longer need to exercise caution when dealing in the company’s securities.

“Telkom continues to execute its strategy to unlock value for shareholders and will provide an update to the market on progress in due course.”