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MTN to buy rivals Telkom, eyes Vodacom #1 spot

MTN is in talks to acquire rival Telkom and increase its number of customers and reach in South Africa. The aim is to overtake Vodacom Group’s lead as the country’s number one network provider.

According to a Reuters report, the deal could be worth over $1 billion and may be settled via a stock or cash-and-shares agreement. What MTN would be gaining is Telkom’s fibre assets, which is believed to be the best way to deliver 5G mobile services.

Telkom’s Openserve fibre business serves about 2.5 million premises and made nearly $782 million in revenue in its last financial year. 

However, there are doubts that South Africa’s competition regulator would approve of the deal because it could divide the market between MTN and Vodacom Group.

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Both companies confirmed that they had started discussions regarding the deal in separate statements. But, as of when this article was published, things were still just starting, and no one had agreed on anything.

“Discussions are at an early stage and there is no certainty that the transaction will be consummated,” a statement read.

Peter Takaendesa, head of equities at Mergence Investment Managers, said: “It (the proposed deal) does make sense in every way. We’re seeing this happening in many other jurisdictions, where the mobile operators are consolidating with fixed line players. The key reason for that really is, as you move towards 4G and 5G, you need more fibre to connect your mobile network.”

Meanwhile, Vodacom has an agreement with the fibre assets of Community Investment Ventures Holdings. With MTN’s plan to be the largest network provider in Africa still on the executives’ minds, they must first dominate their home country.

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Onwuasoanya Obinna

A reader of books and stringer of words. Passionate about Science and Tech. When not writing or reading he is surfing the web and Tweeting.