Telkom's share price surged this morning on speculation that MTN would make an offer for its fixed-line business and it would sell its Vodacom stake to Vodafone.
In midmorning trade, Telkom's share price had bounced 580c, or 3.29%, to R182, with more than a million shares changing hands. However, MTN had dipped 20c, or 0.18%, to R108.60, in light trade, with only 72 000 shares moving.
A weekend news report by the Sunday Times stated the MTN and Telkom boards were mulling a proposal that the latter sell its 50% stake in Vodacom and then MTN buy its fixed-line business.
"Certainly Telkom's shares have reacted to that report. However, neither company has issued a cautionary announcement and this suggests talks are not as far advanced as some may hope," one JSE analyst says.
Piet Viljoen, CEO of asset management firm Regarding: Capital Management, says the news sounds logical, but all the trading is purely speculation.
"Investors are hoping that Telkom sells its Vodacom stake to Vodafone [the UK network operator which also owns half of Vodacom] and then MTN buys the fixed-line business, because once Telkom sells Vodacom it is a much smaller business than MTN," he says.
The analysts say that, should MTN buy Telkom's fixed-line business, it means government will effectively exit the fixed-line arena.
"That would be a good thing, because currently government plays both the referee and the game, and its exit from the market would be welcomed by the industry," the JSE analyst says.
The analyst says government's plans for its new broadband infrastructure provider Infraco are still unclear to the market. However, such state intervention implies the regulator - the Independent Communications Authority of SA - had failed to reduce telecommunications prices, he notes.
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