Will South Africa’s MTN buy rival Telkom?

Will South Africa’s MTN buy rival Telkom?

It’s not been officially confirmed, but a number of African news outlets are reporting that South African operator MTN has made a takeover approach for Telkom.

Given that MTN and Telkom are the country’s second and third-largest telecommunications operators behind Vodacom, this would not be a modest deal.

According to MTN Group’s latest quarterly report (to the end of September 2021) its total subscriber numbers in South Africa increased by about 849,000 in the quarter to 33.5 million. In August Telkom’s total was around 16 million. Combined, this would easily overtake Vodacom’s June 2021 estimate of 44.6 million.

As regular readers will know, MTN has been involved in an asset-disposal programme that has been fairly lucrative – and will be even more lucrative once the recently reported sale of shares in MTN Nigeria goes ahead.

According to Bloomberg in fact, MTN has been paying debt at a rapid rate as it disposes of non-core assets. That includes the phased sell-down of a stake it holds in recently listed IHS Towers, the sale and leaseback of its South African towers and exiting some Middle Eastern operations. The extra cash could help it to build on its core business. 

It’s worth adding, however, that Telkom has expressed no interest and that MTN has said that no deal is on the table. 

This is the second time in a matter of days that MTN and Vodacom have been in the news. Last week, less than three years after terminating its roaming agreement with MTN in favour of a similar arrangement with Vodacom, Telkom is back roaming on the MTN network. Telkom customers will now have access to three networks – its own, Vodacom’s and MTN’s.

As for the suggested sale of MTN, even if it were confirmed there would be a long way to go: government support would be required and a number of competition issues would have to be worked on.

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