MTN mulls buying into Telkom

MTN Group is reportedly mulling the possibility of taking a majority stake in Telkom – South Africa’s largest landline provider – in a bid to challenge the dominance of Vodacom, a Vodafone Group subsidiary.

According to a Bloomberg report, MTN has held “exploratory discussions” in recent months. Sources say a bid is not imminent, however, as a final decision has still to be made.

The report comes on the heels of a Telkom filing with the Johannesburg Stock Exchange (JSE) saying that it remains in discussions with MTN South Africa “regarding the potential extension of their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom’s radio access network”.

The JSE filing goes on to say that if the deal is successfully concluded then it “may have a material effect on the price of Telkom’s securities”. The statement adds that shareholders would be kept updated.

A merger with Telkom, which is about 40 per cent owned by the state, would boost MTN’s ability to launch bundles of fixed and mobile services. Telkom may also see the attraction of a deal, since it only has a relatively small mobile business as South Africa’s fourth largest mobile operator.

Vodacom – the largest mobile operator in South Africa – is seeking antitrust approval to acquire broadband company Neotel, which is the country’s second-largest provider of fixed-line services behind Telkom.