MTN Group, Africa’s largest telecommunications provider, is making plans to acquire Telkom, a South African telco.
Lastweek, the companies said they were in discussions over a deal for MTN to buy all of Telkom either with shares or a combination of cash and stock.
“Discussions are at an early stage and there is no certainty that the transaction will be consummated,” MTN and Telkom said in separate statements issued via the Johannesburg Stock Exchange.
The news set Telkom’s share price alight, pushing it over 30 per cent higher, while MTN was up nearly 5 per cent.
MTN is South Africa’s second-biggest telecommunications provider while Telkom is the third-largest.
According to Reuters, the deal between MTN and Telkom, if successful, would bolster MTN in its competition against Vodacom Group, the market leader.
The news agency said the deal would give MTN access to Telkom’s fiber assets, seen as a must for expanding 4G and 5G mobile services.
“It (the proposed deal) does make sense in every way. We’re seeing this happening in many other jurisdictions, where the mobile operators are consolidating with fixed line players,” Peter Takaendesa, head of equities at Mergence Investment Managers, said.
“The key reason for that really is, as you move towards 4G and 5G, you need more fibre to connect your mobile network.”