Telkom SA’s share price slumped more than 20% in early trade, after it announced that the talks about its acquisition by rival MTN were over.
The share price was trading at R37.72 on Wednesday morning.
The slump comes after the price rose sharply from as low as R32.76 in June, just prior to the first announcement in July that MTN and Telkom were in talks.
There was media speculation in November the year before of a possible tie-up following a tentative approach by MTN, but Telkom was reportedly not interested at the time.
Telkom had also received an unsolicited proposal from data-only mobile operator Rain in September, an expression of interest that drew the ire of SA’s takeover regulator as no approvals had been sought for such a deal.
Telkom said in a JSE regulatory notice the discussions about the possible acquisition in return for shares or a combination of cash and shares in MTN were supposed to have been concluded at the latest October 4.
“MTN terminated discussions in relation to the MTN Proposal on October 18, 2022, as Telkom was not in a position to provide MTN with assurances around exclusivity, Telkom said.
“Discussions were at an early stage and had not progressed to due diligence nor had a binding offer been received by the Telkom board of directors,” Telkom directors said.
Telkom’s board said they would consider all bona fide offers.
“Shareholders are advised that they no longer need to exercise caution when dealing in the company’s securities,” they said.
“Telkom continues to execute its strategy to unlock value for shareholders and will provide an update to the market on progress in due course,” they said.
Rain said a merger with Telkom could create a leader in the 5G market, with other benefits such as infrastructure sharing and avoiding the creation of a mobile duopoly in the form of Vodacom and MTN.
Following this, MTN issued a withdrawal of the cautionary announcements the telecommunications giant made on 15 July, 22 August and 30 September earlier this year, on the Stock Exchange News Service of the JSE Limited (SENS).
“After extensive engagements and deliberations between the parties, shareholders are advised that the discussions regarding the Proposed Transaction have terminated, as the parties were unable to reach agreement to their mutual satisfaction on the process going forward. Consequently, caution is no longer required to be exercised by shareholders when dealing in MTN securities,” MTN said in a statement today.
“The board of directors of MTN accepts responsibility for the information contained in this announcement and certifies that, to the best of its knowledge and belief, such information is true, and that this announcement does not omit any facts that would make any of the information false or misleading or would be likely to affect the importance of any information contained in this announcement,” MTN further said.
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