Govt body asks Rain to retract its proposal to merge with Telkom

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JOHANNESBURG – A government agency has slammed data network provider Rain for proposing to merge with larger competitor Telkom SA, saying the company failed to obtain prior approval.

Rain, which is owned by South African billionaire Patrice Motsepe, said Thursday it had proposed a merger with Telkom to trump wireless company MTN’s plans to acquire Telkom.

The country’s Takeover Regulation Panel (TRP), a government agency, said the announcement was issued by Rain without the prior approval required by law.

“Rain’s posting of the announcement is unlawful and Rain has been ordered to withdraw the announcement,” it said.

“Under these circumstances, all parties (ie shareholders) and the market are advised to ignore the announcement.”

Last month, the country’s second-largest telecoms company, MTN, said it was in talks with Telkom over a stock or cash-and-shares deal that could see the country’s largest telecoms company overtake larger competitor Vodacom Group.

Analysts said the takeover is unlikely to pass the Competition Commission as it would create a virtual duopoly in the country.

Rain said the proposed merger with Telekom would create a more competitive landscape and create three major telecom operators.

“It’s a logical alternative to simply selling it to MTN and would also be consistent with the government’s pro-competitive policies,” Rain said in a statement.

Telekom shares rose over 6 percent by 1410 GMT after the announcement, but it said in a separate statement that it had not received an offer from Rain.

Mostsepe operates a diversified business network ranging from mining, financial services, telecom, renewable energy to early stage investments through Africa Rainbow Capital (ARC) Investments.

Rain, which offers 4G and 5G data services, has been one of its fastest-growing companies in its portfolio and claims to have one of the largest 5G networks in the world, covering over 6 million homes.

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