Telkom shares plunge as MTN exits takeover talks

Africa’s largest mobile operator by subscription, MTN, has called off its talks with Telkom about a proposed takeover. 

MTN said in a statement on Wednesday that “the parties were unable to reach agreement to their mutual satisfaction on the process” and so “shareholders are advised that the discussions regarding the proposed transaction have terminated”. 

In July MTN made public its interest in acquiring Telkom. Had the deal been successful, it would have seen MTN overtaking Vodacom as South Africa’s largest telecommunications company. 

In a separate statement Telkom, South Africa’s third-largest mobile operator, said the talks soured because it “was not in a position to provide MTN with assurances around exclusivity”.

Newcomer Rain, had recently offered itself to Telkom in exchange for new shares in the company. Telkom issued a statement saying its board was entertaining a separate proposal from the mobile operator.

In the statement issued on Wednesday about the collapsed discussions with MTN, 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.” 

MTN walking away from the talks to acquire Telkom sent Telkom’s share price crashing by 25% to trade at R33 a share by midday on Wednesday. MTN shares took a far less severe knock, having lost about 3.5% by 3pm.