mtn

A general view of the headquarters of South Africa’s MTN Group in Johannesburg, May 27, 2008. South African companies and investors are beginning to use their base in Africa’s biggest and most sophisticated market as a springboard to move into the continent’s fast-growing frontier markets. (FRONTIERS/AFRICA REUTERS/Mike Hutchings)

MTN and Telkom woes sparks possible merger

Things are not looking good for MTN and Telkom. That’s why the two network giants are in talks to merge their business.

mtn

A general view of the headquarters of South Africa’s MTN Group in Johannesburg, May 27, 2008. South African companies and investors are beginning to use their base in Africa’s biggest and most sophisticated market as a springboard to move into the continent’s fast-growing frontier markets. (FRONTIERS/AFRICA REUTERS/Mike Hutchings)

After recent setbacks of sizeable proportions, rumours of a possible merger between network giants, MTN South Africa and Telkom, have surfaced.

The two operators have held discussions concerning the matter. This comes after MTN’s shares slumped to the lowest it has in years.

The Central Bank of Nigeria stated that MTN had illegally moved money out of the country and demanded that ‘Africa’s biggest mobile network’ return $8.2 billion.

Shortly after, Nigeria’s Attorney General also made a demand from the mobile operator by saying it owed back taxes on foreign imports into the country; the sum amounts to $2 billion.

Read – MTN: Many clients’ data and airtime wiped out due to technical error

MTN and Telkom woes make merger a possibility

Meanwhile, in South Africa, Telkom is dealing with its own issues. The network is offering its workers voluntary retrenchment packages. Telkom has said that the retrenchments are due to subsidising around R70 billion through asymmetric call termination rates.

Read – Telkom CEO pockets a whopping R27 million paycheck

In recent months, the network has seen the departure of several top executives.

Due to regulatory issues in multiple countries, MTN is also in the process of reviewing its footprint in Africa and the rest of the world.

According to Wayne Currie of FNB Wealth and Investments, Cell C and Telkom Mobile face major issues as the country’s two smallest mobile networks. Currie stated that the networks need to look into a merger for survival.

Read – Ookla: Reveal that Telkom is the slowest 4G network in South Africa

The deal between MTN and Telkom could prove very beneficial for both parties.

The networks also locally own large fibre assets with MTN’s Supersonic and Telkom’s Openserve division.

The possible merge will, however, not be an easy task as the competition authorities and regulatory bodies need to give its approval. This might turn out to be another challenge for the two networks.