MTN has walked away from talks to buy Telkom – a deal that would have created South Africa’s largest mobile-phone operator.
MTN ended discussions because Telkom couldn’t assure the bigger telecom company that talks were exclusive, Telkom said in statement on Wednesday, confirming an earlier Bloomberg News report.
“Discussions were at an early stage and had not progressed to due diligence, nor had a binding offer been received by the Telkom board of directors,” said Telkom, which is part-owned by the South African government. A representative for MTN said the company would issue a statement shortly.
Telkom shares fell as much as 25% after the announcement, valuing the company at about 18 billion rand ($1 billion). MTN shares fell by 2%.
The companies were also concerned about getting antitrust approval for any deal, people familiar with the matter said, asking not to be identified because the deliberations were private.
The talks initially stalled following an unsolicited approach from Rain Group Holdings Pty Ltd., which proposed selling itself to Telkom, Bloomberg reported. The uncertainty caused by this rival proposal also contributed to talks breaking down, the people said.
The combination of MTN and Telkom would have overtaken rival Vodacom Group Ltd. in having the most subscribers in South Africa.
The deal would have also likely raised a number of antitrust concerns, given that the number of major mobile networks in the country would have been reduced to three from four, with the vast majority of customers using the top two carriers.