Rain has withdrawn its announcement stating that it submitted a merger proposal to the Telkom board.
“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,” the company said.
“We believe the business case for a merger is very compelling for both companies and believe it is achievable.”
Rain said it intends to submit a formal non-binding proposal to Telkom in due course.
The cellular network operator’s retraction comes after a sternly-worded rebuke from the Takeover Regulation Panel (TRP) ordering it to withdraw its statement.
Within hours of Rain releasing its media statement, the TRP said the company had acted against instructions not to make any announcement without its approval.
“The Takeover Regulation Panel has noted, with grave concern, a press announcement issued by Rain proprietary limited (‘Rain’) regarding a potential offer to merge with Telkom on 11 August 2022,” it said in a statement to shareholders on the JSE news service (SENS).
“We wish to inform the market that the announcement was issued by Rain without the prior approval of the TRP as required in terms of Regulation 117 of the Companies Regulations.”
Rain, of which Patrice Motsepe’s African Rainbow Capital owns around a 20% stake, said a merger with Telkom would create a 5G powerhouse.
It also believes it would offer a strong third player to compete with the Vodacom and MTN “telco duopoly”.
According to Rain, their merger offers a more pro-competitive alternative than the government selling Telkom to MTN.
Rain gave no details on how its proposed transaction would be structured, saying that those particulars would need to be negotiated.
“Further details will be published as appropriate in compliance with the Takeover Regulations,” Rain has assured.