Telkom and Rain break off merger talks

Network operators Telkom and Rain have decided to end talks that would have seen the two companies merge, following an agreement that a suitable deal was not viable.

In a statement on Wednesday, ‘big-six’ network provider Telkom, said “the parties have decided that a suitable transaction is not possible at this time”, following initial discussions to acquire Rain.

Rain, which makes up part of the Patrice Motsepe-backed African Rainbow Capital stable, believed its tie-up with Telkom would have formed a powerful 5G entity to compete with rivals in the mobile operator market

The collapsed talks come just over three months after Telkom formally received a non-binding proposal from Rain, whereby it would potentially be acquired by Telkom for newly-issued shares in the partially state-owned firm.

“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 said.

Before data-only provider Rain approached Telkom to initiate merger talks, Telkom had been MTN’s takeover target, which would have seen South Africa’s second- and third-largest operators integrate, leading to the formation of the country’s biggest mobile phone operator.

However, MTN walked away from early-stage discussions with Telkom in October, saying Telkom could not provide it with exclusivity assurances and that there had not been a binding offer by Telkom’s board of directors.

By late afternoon, Telkom’s share price had soared 8.71% to trade at R35.20.