MTN in Talks to buy Telkom, South Africa’s 3rd biggest Phone Operator

MTN Group Ltd. is in talks to buy smaller domestic rival Telkom SA SOC Ltd. in a deal that would combine South Africa’s second and third-largest telecommunications operators.
According to Bloomberg, MTN would pay for the partially state-owned company in shares or a combination of cash and stock, according to a statement on Friday.

Discussions are at an early stage and there is no certainty the transaction will be completed, the carriers said.

Telkom shares soared 15%, the most since September, valuing the company at almost 20 billion rand ($1.2 billion).

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Following a multi-year asset-disposal program, MTN is flush with cash and looking to strengthen its hand in core African markets.

A combination with Telkom would help close the gap with Johannesburg rival Vodacom Group Ltd., South Africa’s market leader, though a number of competition issues would have to be worked through as the deal would create an effective duopoly.