South Africa’s Telkom & Rain Pull The Plug On Merger Talks

In yet another dramatic turn of events in South Africa’s telecommunications industry, Telkom has pulled out of talks regarding the acquisition of Rain. 

Last September, Rain, a smaller mobile network provider that is unarguably the first operator to launch 5G in the country, approached Telkom with a pitch to sell out in exchange for some of its fresh shares. 

At the time when deliberations started, a predetermined deadline of December end was set for the deal to be re-evaluated. Now, the deadline is passed, leaving both companies unwilling to proceed. 

“After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time. We continue to execute its strategy to unlock value for shareholders and will provide an update on progress in this regard in due course.”

Though the news might be a bit anticlimactic for Rain, Telkom shareholders seem hopeful that it paves the way for MTN, the second-largest mobile operator in the market, to reconsider its intentions to acquire Telkom. 

It was in 2014 when MTN first indicated an interest in buying Telecom, but the country’s telecoms watchdog, ICASA, blocked the companies’ initial attempt to set the deal rolling. Ever since it has been reported that both companies have continued eyeing each other.

Then, in 2022, both ventures resumed discussions but MTN later walked away from the deal, citing the absence of exclusivity since Telkom was also in talks with Rain. Almost as soon as Telkom disclosed that it would be interested in the acquisition, MTN pulled the plug. 

With the table clear of unfinished business, MTN could resume merger talks with Telkom, especially as it looks to overtake Vodacom to become the largest telco in the market.