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South Africa’s Telecommunications company- MTN – has entered into discussions to acquire a smaller rival Telkom. Telkom is partly state-owned. The transaction would be in return for shares or a combination of cash and shares in MTN
South Africa’s Telecommunications company- MTN – has entered into discussions to acquire a smaller rival Telkom. Telkom is partly state-owned. The transaction would be in return for shares or a combination of cash and shares in MTN, sources revealed.
Discussions are at an early stage. The companies said that if the transaction was concluded, it may have a material effect on each other’s share price. However, both companies have warned the shareholders to exercise caution until further communication. Telkom’s share price climbed by 27% in early Friday morning trade after the announcement, while MTN’s share price rose by 3%.
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Telkom said that former MTN chief executive Mteto Nyati had joined its board as a non-executive director, who has been responsible for returning MTN South Africa to growth by improving the customer experience. Telkom’s current market capitalisation is R21.7- billion while MTN ‘s is R260 billion, indicating a huge difference in its market valuation. Market analysts are keenly watching the movements of the share prices of both companies.
