MTN Group Ltd dropped out of talks to buy Telkom – a deal that would have created South Africa’s largest mobile operator.
MTN ended discussions because Telkom could not assure the largest telecom company that the negotiations were exclusive, Telkom said in a statement on Wednesday, confirming an earlier report from Bloomberg News.
“Discussions are still in the early stages and have not progressed towards due diligence, and Telkom management has not received a binding offer,” said Telkom, a South African government-owned company, said. A representative from MTN said the company will release a statement soon. Telkom’s 4,444 shares have fallen 25 years after the announcement, valuing the company at around 18 billion rand ($1 billion). MTN shares fell 2%.
The companies are also worried about getting antitrust approval for any deal, people familiar with the matter said, asking not to be identified because the discussions are private.
Initial talks stalled after an unsolicited approach from Rain Group, which offered to sell itself to Telkom, Bloomberg reported. These people said the uncertainty caused by this opponent’s proposal also contributed to the breakdown of negotiations.
The combination of MTN and Telkom will overtake rival Vodacom Group for the most subscribers in South Africa. The deal is also likely to raise some antitrust issues, as the number of major mobile networks in the country will be reduced to three from four, with the majority of customers using the two major carriers.
