It appears Telkom’s apparent willingness to engage with Rain about a possible deal could harm its merger talks with MTN Group.
MTN issued a curiously worded statement to investors, via the JSE’s stock exchange news service, on Friday, in which it said it has written to Telkom’s board about Telkom’s announcement, earlier in the day, that it was considering a proposal tabled by Rain.
MTN said its board has “considered the announcement issued by Telkom in which it refers to a non-binding proposal that Telkom received from Rain [and that] based on such announcement, the board of MTN has addressed a letter to the board of Telkom containing MTN’s comments thereon”.
It said further that Telkom responded to its letter, promising only a fuller response “in due course”.
“A further announcement will be released by MTN, setting out its position with regards to the future of the transaction,” MTN said, suggesting it is prepared to walk away from its talks to buy Telkom.
MTN did not say when it might make this “further announcement”. Reading between the lines, however, it appears that MTN it is signalling to Telkom that it does not want a messy negotiation where another party is involved in discussions and where another deal may be being considered.
The timing of Telkom’s statement earlier on Friday, also issued via the JSE, is curious given it was issued more than two weeks after its board received a non-binding proposal from Rain about a deal on 14 September. Rain, it said, has proposed that Telkom acquire the mobile broadband operator.