Inside story of why MTN walked away from deal to buy Telkom
MTN didn’t walk away from negotiations to acquire Telkom over exclusivity demands, a source close to the matter told MyBroadband.
Earlier this week, Telkom informed shareholders that MTN ended their discussions on 18 October because it “was not in a position to provide MTN with assurances around exclusivity”.
However, a source who asked to remain anonymous because of the sensitivity of the discussions told MyBroadband that this wasn’t accurate.
According to the source, MTN had requested Telkom not to consider its various proposals concurrently.
This was because MTN’s past experience with such matters showed that it slows negotiations down, likely dragging a three-month process out over a year or more.
MTN apparently asked Telkom to consider the various deals on the table in whatever order it preferred, so long as it wasn’t concurrent.
It then asked Telkom how long it would need to consider Rain’s proposal, and the partially state-owned network operator could not provide a firm answer.
Without firm timelines on the table, MTN decided to walk away.
Telkom’s apparent indecisiveness has cost shareholders dearly, with its share price down 27% from its September high of over R49 to around R36.
However, it is also possible that MTN will return to the negotiating table with Telkom after it has concluded its flirtations with Rain.
Telkom year-to-date share price on 21 October 2022
MTN and Telkom first announced they were in takeover talks in mid-July 2022.
The companies revealed that MTN was considering acquiring Telkom’s entire issued share capital in return for shares, or a combination of cash and shares in MTN.
MTN’s withdrawal came after Rain tabled another offer to Telkom, proposing it should buy Rain in exchange for shares in Telkom.
In addition to the information from the source, MyBroadband also received recent internal announcements at MTN and Telkom.
MTN’s was a message from Group CEO Ralph Mupita to staff after they announced that they were walking away from the deal.
The Telkom announcement involved the secondment of a senior executive to its group mergers and acquisitions department.
MTN Group CEO Ralph Mupita’s message to staff after calling off Telkom discussions
Mupita’s message is reproduced in full below.
I hope you are all keeping well.
As you would have noted, following the communication from Executive: Group Company Secretary, Thobeka Sishuba-Bonoyi, as well as the announcement on the Johannesburg Stock Exchange earlier today, we have withdrawn our non-binding offer to acquire all the shares of Telkom for shares or shares and cash.
I would like to thank all MTNers who were involved in the discussions and the due diligence engagements we have had with Telkom, for their hard work. I would equally like to thank the team from Telkom, whom we engaged with professionally and respectfully over the last few months.
Our MTN SA business still has exciting and strong growth opportunities, and we continue to partner with Telkom on the National Roaming Agreement that we have in place.
Furthermore, I wish to assure all our people and stakeholders that we remain committed to deliver on our Ambition 2025 strategy to lead digital solutions for Africa’s progress and continue to consider various opportunities in this respect.
Telkom seconds senior executive to mergers & acquisitions department
Telkom informed staff on Thursday, 20 October 2022, that the managing executive for digital and technology, Beauty Apleni, had been seconded to the group mergers and acquisitions team with immediate effect.
Keneilwe Gwabeni will act in Apleni’s role while she is seconded.
“In light of all the corporate activity happening in our company, Group Leadership has asked us to support these initiatives and resource Group capabilities and Teams with Senior Leaders that will help guide these transactions,” the internal Telkom announcement stated.
“We wish both ladies all the best in both their new roles.”
MyBroadband asked Telkom for comment on Apleni’s secondment, but it did not respond by the time of publication.
Loading ...