In an update to shareholders today, the telcos said MTN’s takeover discussions with Telkom are progressing, and urged caution when dealing in securities.
This, as the market eagerly awaits the outcome of the proposed deal, which the companies first announced on 15 July, saying Africa’s largest mobile operator, MTN Group, plans to add Telkom to its stable.
MTN operates in 19 markets, with a subscriber base of more than 270 million, while Telkom has maintained a third spot in SA, but holds a lot of potential with its underutilised assets, according to analysts.
“Shareholders are advised that discussions are still in progress which, if successfully concluded, may have a material effect on the price of the company’s securities. Accordingly, shareholders are advised to continue to exercise caution when dealing in the company’s securities until a further announcement is made,” MTN notified investors.
Telkom also cautioned its shareholders of the development, saying “discussions are still in progress” and a further announcement will be made in due course.
The potential takeover of Telkom has sparked industry-wide debate, with analysts telling ITWeb last week that Vodacom’s move to acquire equity in Community Investment Ventures Holdings spooked the telecoms market, opening the race for Telkom’s assets.
The potential of the Vodacom and CIVH deal comes on the back of fierce competition in the fibre market.
Data-only network Rain and Toto Investments have also declared their interest in Telkom’s assets.
Trade unions, led by Cosatu, have also joined the debate, sounding warning bells on a potential MTN and Telkom tie-up, saying mergers of large companies result in thousands of workers losing jobs.
Solidarity and the Communication Workers Union also recently expressed fears of a jobs bloodbath should the MTN-Telkom merger deal see the light.
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