Rain, the South African data-only network provider, has made a formal, but not legally binding, request to merge with mobile and fixed-line phone company Telkom.
A public reprimand from South Africa’s takeover regulator was issued to Rain in August as a result of the company’s public declaration of interest in a merger, despite the fact that the agency had not yet provided any approval. Also, it happened not long after MTN, the biggest mobile phone company in Africa, said it was thinking about buying Telkom for shares or a mix of cash and shares.
African Rainbow Capital, which is one of Rain’s most essential owners, places a value of approximately R18 billion on the company. In comparison, Telkom is now valued at R23.7 billion on the JSE, while MTN is at R225 billion.
Read also: Rain Obtains R17.9 billion valuation in South Africa
Bloomberg has also reported that the South African government has been made an unsolicited offer of R7 billion for its 40.5% stake in Telkom by the investment firm Toto Consortium. Toto Consortium is a member of a consortium that controls a 24% stake in Richards Bay Minerals, which is majority owned by the mining giant Rio Tinto.
Rain was previously in debt
At the end of March, Telkom had a net debt of R7.5 billion, and its board is presently investigating options to unlock value for shareholders. The board is of the opinion that the price at which its shares trade does not reflect the fundamental value of the business.
In a statement released on Friday, Telkom’s board of directors said, “The Telkom board of directors, aware of economic and market dynamics and in line with its legal obligations, is currently considering different strategic options, including non-binding merger and acquisition proposals received to date.”
“The Telkom board is currently reviewing the Rain proposal, and we are not yet in a position to offer our thoughts on the matter.”
Rain thinks that a merger with Telkom could create a “5G powerhouse” and have other benefits, such as those related to infrastructure while stopping Vodacom and MTN from becoming a “duopoly” in the mobile market.
About Rain
Rain Ltd. is a mobile communications company based in South Africa that offers voice, message, data, and integrated services to its customers.
Rain began offering data-only services in February 2019, shortly after its inception. To do this, the company rented equipment from both Vodacom and MTN and used 3000 of its own cell towers.
In June 2020, Rain made the announcement that it would be launching 1,500 5G standalone towers the following year, in 2021.
In South Africa, Rain is a mobile network provider that only delivers data services. Through a collaboration that allows them to utilize the infrastructure of Vodacom and MTN, they offer 3G, 4G, and LTE services. It is the nation’s first standalone 5G (3600) network that has only just launched. Huawei is the power behind it.
Rain’s Standalone 5G is now available in Cape Town, covering a wide range of neighborhoods there, including Sea Point in Cape Town, Claremont, Goodwood, Bellville, Durbanville, and Cape Town City Centre.