Rain Retracts Telkom Merger Offer Announcement

Rain Retracts Telkom Merger Offer Announcement

After submitting a merger proposal to the Telkom board, Rain withdrew its announcement. Following a harsh warning from the Takeover Regulation Panel (TRP), which required the cellular network operator to recant its remark.

The TRP claimed that the company violated instructions not to make any announcements without its consent just hours after the firm released a statement to the media.

In a statement, Rain expressed delight with Telkom’s SENS release declaring that if an offer or formal proposal is received from it, the board of Telkom would examine it.

“As Rain, we are pleased with Telkom’s SENS announcement stating that if an offer or formal proposal is received from Rain, the board of Telkom will consider it. We believe the business case for a merger is very compelling for both companies and believe it is achievable,” the company said.

The company announced that it would soon present Telkom with a formal, non-binding proposition.

At first, Rain refused to retract the press release, claiming that it was seeking legal counsel and that, in its opinion, a request to present to the Telkom board was not subject to regulatory notification. However, after additional discussion with the regulator, it made the decision to rescind the press release from August 11, 2022.

A combination with Telkom would create a 5G powerhouse, according to Rain, in which Patrice Motsepe’s African Rainbow Capital holds about a 20% share. Additionally, the company thinks it would provide a potent third competitor to challenge the “telco duopoly” of Vodacom and MTN.

As opposed to the government selling Telkom to MTN, Rain claims that their merger offers a more pro-competitive option. Rain said that those specifics would need to be negotiated but did not provide any information regarding the structure of the proposed deal.

In a closing statement, Rain noted that further details would be published as appropriate, in compliance with the Takeover Regulations.