MTN has had Telkom, South Africa’s third largest operator, in its sights for several years
Now, with a new CEO in place, Telkom has entered negotiations to be acquired in its entirety by MTN. The former MTN executive Serame Taukobong is taking over from outgoing Sipho Maseko. Telkom is 40% owned by the South African government and its shares rose more than 26% when the talks were made public.
MTN is the second-biggest telecoms group in South Africa and Telkom the third largest. Combined, they would have about 45% of the market. According to the Financial Times [subscription needed], the talks are taking place against the backdrop of an investment boom in the country’s mobile economy where 2G and 3G connections are still in widespread use.
Competition authority
How the proposed deal will be viewed by South Africa’s competition commission remains to be seen. In 2014 it prevented MTN from acquiring Telkom’s radio infrastrcuture and in 2015 blocked a network sharing deal between the two, claiming it would result in a “duopoly market structure”. More recently, the commission has complained about data prices being too high and in 2020 ordered providers to cut their prices.
MTN is emerging from a long period of restructuring, debt repayment and difficulties in Nigeria, which is its biggest market. It has ambitions to overtake South Africa’s market leader, Vodacom, in the build-out of data infrastructure in the country: in the wake of recent regulatory chances: South Africa finally held a spectrum auction for 4G and 5G services in March, after years of delay under President Cyril Ramaphosa’s government.
MTN aims provide 5G coverage to a quarter of South Africa’s population by the end of this year, matched Vodacom’s investment of R14.5 billion (€843 million), ahead of the third highest bidder, Telkom. MTN and Vodacom invest the most heavily in their infrastructure, while the rest attempt to compete on price in what remains an expensive market for mobile data by regional standards.
Earlier this year, MTN sold thousands of South African mobile towers to IHS, an independent operator. It is also reportedly considering listing or selling its mobile-money unit, which some analysts say is now the biggest in Africa.