MTN dumps Telkom, eyes Verizon

Johannesburg, 14 Feb 2008

MTN has decided to withdraw from discussions aimed at re-entering the bidding war for SA's fixed-line operator, Telkom.

Telkom is already in preliminary discussions with Oger Telecom, Cell C's part shareholder.

Last month, ITWeb revealed that MTN and Telkom's investment bankers were already involved in early talks to re-enter their bids. The expression of interest from Oger was expected to result in MTN instituting firm moves on the telco.

However, a source close to the companies says MTN has decided to turn its back on a Telkom acquisition. This is based on the difficulties such a deal would encounter with competition authorities, he explains.

"MTN would have to break down the structure of Telkom significantly to get it past the Competition Commission and Tribunal. This would strip the deal of almost all the value MTN hoped to get from the deal. At the end of the day it just didn't make sense," he reveals.

Market watchers have long contended that the proposed acquisition would be very difficult, if not impossible, to get past competition authorities.

On the Verizon

Meanwhile, ITWeb has established that MTN has turned its eye to Verizon's local operations.

An insider at the communications provider has confirmed that Verizon has received acquisitive interest from MTN, but added that in the last year the company had received around 20 such propositions.

MTN competitor Vodacom is believed to be one of the companies that have tried to acquire the local operation. However, to date, none of the bids have been successful.

At this stage, it is unknown whether MTN would look to buy the South African operations alone or include Verizon's other operations on the African continent. Verizon has offices in Kenya, Namibia, Zambia and Botswana.

Both MTN and Verizon have declined to comment on market speculation and rumour.