By: Natasha Archary
Telkom says while it notes interest for a possible merger, no formal offer from Rain has been tabled.
The data-only mobile operator is said to have approached Telkom with a proposal for a merger which would create a company worth R40 billion.
However, the Takeover Regulation Panel has ordered Rain to withdraw its statement, declaring the proposal unlawful.
Rain announced on Thursday that a formal request to propose the merger to Telkom was made, and the company wants Telkom to sever ties with MTN.
CEO of Rain, Brandon Leigh says the merger will create a 5G powerhouse company that would undoubtedly become the third telecommunications giant in the country.
Unlike Telkom which has an interest-bearing debt of more than R8 billion, Rain is financially stable.
The newcomer on the block broke even last year and is set to record a profit margin of R1 billion for the year.
“The merger will create a cost-efficient operation that could turn Telkom’s financial situation around. As a standalone company, Rain has sufficient funding for its rollout and growth. We assume Telkom has the same.
The terms and valuation of the merger would still need to be ironed out.
Meanwhile, Telkom has said that if a formal offer from Rain is tabled, it would be considered, provided it is in accordance with legal parameters for a merger.
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