Telkom and Rain merger talk gathers steam

Rain has reportedly formally requested to present the Telkom board with a proposal to merge the two companies.

“Although the terms of such a transaction – such as valuation and structure – would still need to be agreed, Rain believes there is a compelling business case in combining the businesses,” the company said, according to MyBroadband.

Rain said a merger would create a 5G powerhouse and a strong third player to compete with what it termed the Vodacom and MTN “telco duopoly”.

Rain argued that a Telkom-Rain merger would offer a more pro-competitive alternative than government selling Telkom to MTN.

READ | MTN IN TALKS TO PURCHASE TELKOM

Rain chairperson Paul Harris said there is great potential for a merger with Telkom to unlock growth opportunities.

“Rain’s prospects as a niche player are great. However, the option to combine forces with Telkom would take the merged company to the next level and benefit both Telkom and rain stakeholders,” said Harris.

“It is a pro-consumer option in line with government policy, and the business case looks compelling.”

Any deal will face intense scrutiny from the Competition Commission and other regulators given the size of the two companies and their dominance in the sector.

Latest numbers show that MTN currently has 34.5 million subscribers, making it the second largest mobile operator behind Vodacom. Telkom has 16.9 million mobile subscribers.

Rain’s network covers over six million homes.

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