Regulator asks Rain to retract Telkom merger proposal
The South African government has censured data networker Rain for offering a proposal to merge with bigger rival Telkom, on the grounds that it had not sought prior approval.Â
Last week Rain owner and billionaire Patrice Motsepe announced that the data service provider had proposed a merger with Telkom in bid to MTN’s designs to acquire Telkom. Motsepe runs a diversified business network that ranges from mining, financial services, telecom, renewables to investments in fledgling companies through Africa Rainbow Capital (ARC) Investments. Rain offers 4G and 5G data services and has been one of his fastest growing companies in the portfolio and claims to have one of the largest 5G networks globally covering over 6 million homes.
The government’s Takeover Regulation Panel (TRP) said the announcement was issued by Rain without the prior approval as required by regulations, Reuters reported. “The publication of the announcement by Rain is unlawful, and Rain has been instructed to retract the announcement,” said the TRP. “In the circumstances, all parties [shareholders] and the market are advised to disregard the announcement.”
Last month, country’s second biggest telecom company MTN said it was in talks with Telkom in a stock or cash-and-shares deal that could create the country’s biggest telecom firm overtaking bigger rival Vodacom. Analysts said the acquisition was unlikely to impress the Competition Commission as it would create a virtual duopoly in the country.
Rain said its proposed merger with Telkom would create a more competitive landscape and three big telecom players. “It is a logical alternative to simply selling to MTN and would also be consistent with the pro-competitive policies of Government,” said an official Rain statement. Telkom shares rose by 6% after the announcement. However, in a separate statement it denied receiving any proposal from Rain.