Following news that the South African government is unhappy with mobile-data-only network operator Rain suggesting a potential merger between it and rival Telkom, Rain has, in effect, reined in its claim.
According to the TechCentral website, following strong criticism by South Africa’s Takeover Regulation Panel (TRP), Rain has withdrawn a press release issued late last week in which it announced a plan to approach Telkom’s board about a merger.
As we reported at the time, the TRP accused Rain of flouting companies regulations in announcing its plan, saying it did so without permission; TRP needs to give prior approval for such announcements.
While Rain has withdrawn the release, it says that it intends to submit a formal, non-binding proposal to Telkom in due course.
Reuters adds that on Friday Telkom said if an offer or formal proposal is received from Rain, its board would consider it in accordance with its legal obligations.
Adding to the complexity of the story, Telkom is currently in discussions with the country's second biggest mobile operator, MTN, about a possible merger.
The reasons for this may be to do with Telkom’s difficult position in the market. As the MyBroadband website points out, despite investing heavily in growing its mobile subscriber base, Telkom, formerly the dominant telecommunications player in South Africa, has been losing market share against Vodacom and MTN over the last five years.
It is also trailing Vumatel in the fibre market and facing stiff competition in the fixed-wireless arena from a number of players – including its would-be partner Rain.
