Rain has made a proposal to Telkom where it suggests the acquisition of Rain by Telkom for newly issued shares in Telkom.
The proposal follows a request by Rain in August to present a merger proposal to the Telkom board to create a new telecommunications player with their combined assets.
Rain argued that such a merger would create a strong third player to compete with Vodacom and MTN’s duopoly.
It also presented the deal as a competition-friendly alternative to MTN buying Telkom.
“The proposed merged entity would create a formidable third major player to compete with what is effectively a duopoly in South Africa,” Rain said.
Rain believes there is a compelling business case in combining the businesses, including removing infrastructure duplication, cutting capital expenditure (Capex), and creating a strong 5G player.
It added that it is well-positioned for growth, with little debt and sufficient facilities to fund its network rollout.
“We are reaching critical mass and achieved EBITDA of over R1 billion in the year to 2022,” Rain said.
Telkom said its board is evaluating the Rain Proposal and is not yet in a position to express a view thereon.