Telkom SA hangs up on Rain merger

Discussions over a possible merger between South African mobile operators Telkom SA and Rain have been abruptly called off.

"Telkom shareholders are advised that Telkom and Rain have terminated discussions in relation to Rain's proposal of the potential acquisition of Rain by Telkom for newly issued shares in Telkom," Johannesburg-listed Telkom said in a statement to shareholders on Wednesday.

"After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time," the operator added.

In October, South African data-only network operator Rain sent Telkom a non-binding proposal suggesting that Telkom acquire Rain and the two merge to "create a credible third player" to compete in SA's telecoms sector.

Rain's interest in Telkom was no secret as it had previously made its intentions known back in August 2022 but was later forced by the Takeover Regulation Panel to withdraw its initial proposal.

Telkom Group CEO Serame Taukobong told Connecting Africa in November 2022 that the company would decide if the Rain merger was "a go or a no-go" by the end of December 2022.

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Telkom is not lacking suitors. MTN had also shown interest in buying Telkom in August 2022, in a deal that would have seen consolidation of the second and third biggest mobile operators in the country.

MTN, however, decided to call it quits in October 2022 because "Telkom was not in a position to provide MTN with assurances around exclusivity." But Taukobong indicated in November that Telkom was still open to MTN coming back to the discussion table.

"Telkom continues to execute its strategy to unlock value for shareholders and will provide an update on progress in this regard in due course," Telkom added in the January 11, 2023, statement on the failed Rain deal.

*Top image is of a Rain user with a SIM card. (Source Rain)

— Paula Gilbert, Editor, Connecting Africa