MTN would consider stake in Telkom as revenue shrinks in home market

(Bloomberg) – MTN Group Ltd. would consider making an offer for a stake in fellow phone company Telkom SA SOC Ltd. at the right price and has received interest from potential buyers for more than 9,000 South African towers. A customer leaves an MTN shop in Johannesburg

“A Telkom stake would have to be a value accretive acquisition,” MTN Chief Executive Officer Sifiso Dabengwa told reporters in Johannesburg on Wednesday. The company isn’t pursuing a deal at present and isn’t in negotiations with the Pretoria-based landline operator, which is almost 40 percent owned by the South African government, he said. A deal probably won’t happen unless “something changes significantly,” Dabengwa said in an earlier presentation.

MTN has been exploring potential acquisitions as revenue shrinks in its home market, where it trails crosstown rival Vodacom Group Ltd. in terms of customer numbers. South African sales declined 3.9 percent last year even as subscribers gained 8.9 percent to 28 million people, the company said earlier on Wednesday.

The shares gained 1.7 percent to 211.99 rand as of 1:45 p.m. in Johannesburg, valuing the company at 391.5 billion rand ($33.2 billion).

MTN has held exploratory discussions about an offer for a majority stake in Telkom, people familiar with the matter said last month. The government wants Telkom to roll out broadband Internet in South Africa and isn’t planning to sell its shareholding, Telecommunications Minister Siyabonga Cwele said on March 2. Jacqui O’Sullivan, a Telkom spokeswoman, didn’t immediately respond to a text message seeking comment.

“There are a lot of attractive assets,” Dabengwa said. “It’s a question of what price.”

MTN's performance over the last year.
MTN’s performance over the last year.
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