Talks to buy Telkom, a South African telco, have been canceled by MTN Group, the largest telecoms company in Africa.
The agreement would have allowed MTN to overcome Vodacom, the current market leader, and become South Africa’s largest mobile operator.
On Wednesday, Telkom said in a statement to investors that ongoing discussions for a potential acquisition had been discontinued because it was unable to guarantee exclusivity to MTN.
“MTN terminated discussions in relation to the MTN proposal on 18 October as Telkom was not in a position to provide MTN with assurances around exclusivity,” Telkom said.
“Discussions were at an early stage and had not progressed to due diligence nor had a binding offer been received by the Telkom board of directors.
“The Telkom board has a legal and fiduciary duty to consider all bonafide offers.
“Shareholders are, therefore, advised that they no longer need to exercise caution when dealing in the company’s securities.
“Telkom continues to execute its strategy to unlock value for shareholders and will provide an update to the market on progress in due course.”
On hearing the news, Telkom’s share price plummeted, falling almost 22% to trade at roughly R34.79.
Both telcos launched talks about a possible acquisition in July, but the conversations came to a halt after Rain, a South African data-only network operator, presented a merger proposal to Telkom.