Telkom CEO says a deal with MTN is technically possible

Telkom CEO Sipho Maseko said a deal between MTN and Telkom is possible if it is structured correctly and if the benefits are highlighted.

Bloomberg recently reported that MTN made a takeover approach for Telkom in a deal that would’ve combined South Africa’s second and third largest telecommunications operators.

Citing people familiar with the matter, Bloomberg said Telkom has so far shown no interest in a sale.

MTN said, “there is no deal on the table in relation to this matter”, which was confirmed by Sipho Maseko in a recent Moneyweb interview.

“I can assure you, as we speak, there is no deal I am looking at or evaluating. There is nothing on my table that is worth evaluating,” Maseko said.

Should MTN try to acquire Telkom, it will have to receive approvals from regulators — including the Competition Commission and the Independent Communications Authority of South Africa.

As MTN and Telkom are the second and third largest mobile operators in South Africa, there is set to be resistance to such a deal.

Maseko, however, is confident that a deal between MTN and Telkom will receive the necessary regulatory approvals if it is structured correctly.

“Consolidation is inevitable at some point in the market — probably in the next two years or so,” Maseko said.

Commenting on regulatory approvals, he said all deals are possible if they are packaged correctly.

“I would therefore not put it totally out of reach. It depends on how you think about the remedies package.”

He said a potential deal with MTN may raise concerns about spectrum concentration or about limiting competition.

“You must have a bit of imagination to make sure you bring the right proposition to the regulators,” Maseko said.

He added that there would be a lot of benefits that should be highlighted, which include job creation, increasing competitiveness, and improving the ability of companies to grow.

Many analysts said a deal between Telkom and Cell C makes more sense, but Maseko said that ship has sailed.

“That bus has left the station. The market now is essentially a three-player market,” Maseko said.

“Whether it will play out to be a three-player market in future or become a two-player market through consolidation remains to be seen.”

Now read: MTN tried to buy Telkom