MTN Group Ltd. has terminated the talks which would have seen the giant telco buy Telkom South Africa SOC Ltd. 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, the company said in a 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 our board of directors,” said Telkom, which is part-owned by the South African government.
MTN Group Stable, Telkom SA Shares Crash.
Telkom SA saw its shares on the Johannesburg Stock Exchange (JSE) plummet to as much as 25% after the announcement, valuing the company at about 18 billion rands ($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,. 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.
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