Viable MTN, Telkom deal looms
SHARES in MTN and Telkom rose yesterday as the companies renewed cautionary statements relating to a deal between them. Telkom jumped 5,7% to touch a high of R184, while MTN climbed 2,6% to trade at R115.
The pair first confirmed market speculation about a potential asset sale on September 3, when Telkom said a review of its mobile strategy had seen it enter into discussions with MTN and Vodafone. Telkom is expected to sell some of its 50% stake in Vodacom to Vodafone, which already owns the other 50% of the cellular operator.
The deal with MTN could see Telkom sell its fixed-line assets to the operator, though some analysts have speculated that a deal might involve only Telkom’s stake in the Sat-3 undersea telecoms cable that links Africa to Europe.
Yesterday, the two cautionaries did not add any meat to the bare-bones announcements. The notice published by MTN simply said the talks concerned “certain assets of Telkom”.
The proposal for Britain’s Vodafone to buy Telkom’s shares in Vodacom might be proving tough to negotiate, since Vodafone has said it does not want to buy the entire 50%.
Its CEO, Arun Sarin, told a Goldman Sachs investor conference last month that he would not be interested in buying Vodacom entirely because Vodafone would be obliged to sell a hefty chunk of those shares to black empowerment investors in the near future, and probably at a substantial discount. The 50% stake in Vodacom is estimated to be worth about R70bn.
Gartner analyst Will Hahn has cast doubt on the likelihood of MTN buying Telkom’s assets, with the spectre of government opposition and fears of job cuts likely to sink the deal.
Hahn doubts the government would be prepared to sell its 38,9% in Telkom to MTN as it had repeatedly shown its determination to retain control of the telecoms sector.
However, a source within the telecoms sector believes that government elements right up to President Thabo Mbeki want MTN to become a “champion of Africa”. That could lead to active political support for MTN to acquire Telkom’s assets to give MTN the physical backbone to expand north.
That apparent interest by Mbeki would help to explain why he got directly involved in MTN’s recent squabble in Benin, where Mbeki and Benin’s President Thomas Boni Yayi brokered a settlement over disputed licence fees that had seen MTN’s network silenced.
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