MTN talks to buy Telkom stalled

MTN’s talks to buy Telkom have stalled following a rival deal proposal from another telecom company, people familiar with the matter said.

Negotiations about price and other terms have stopped for the time being, though MTN hasn’t decided to walk away from the deal, the people said, asking not to be identified because the discussions are confidential.

The people said that MTN, Africa’s largest wireless operator, stepped back after Telkom got another approach from Rain Group Holdings Pty Ltd., creating uncertainty about its proposal.

Rain said in August that it had offered to sell itself to Telkom, which is partially owned by the South African government, in exchange for shares.

The people said that talks could restart if Telkom clarifies its position on the Rain offer.

A representative for MTN declined to comment.

A spokesperson for Telkom referred to the company’s statement on Oct. 4, which said that MTN’s proposal was still under consideration by both parties and that shareholders should exercise caution. The spokesperson declined to comment further.

MTN and Telkom’s potential combination would create South Africa’s largest mobile operator by subscribers, closing the gap with rival Vodacom.

It could also raise antitrust concerns, reducing the number of major mobile networks in the country to three from four, with the vast majority of subscribers controlled by the top two carriers.

Telkom shares have gained about 45% in Johannesburg trading since July 14, the day before the talks with MTN were disclosed, valuing the company at R24.5 billion.