Rain has formally requested to present the Telkom board with a proposal to merge the two companies. “Although the terms of such a transaction such as valuation and structure would still need to be agreed, Rain believes there is a compelling business case in combining the businesses,” the company said.
Rain said a merger would create a 5G powerhouse and strong third player to compete with the Vodacom and MTN “telco duopoly”.
It said there is a strong business case for a Telkom-Rain merger and that it offers a more pro-competitive alternative than government selling Telkom to MTN.
“Some consolidation in the industry is both desirable and inevitable as it leads to better utilization of infrastructure,” Rain stated.
“It should not, however, be at the expense of competition which promotes greater access for consumers to data at more affordable prices.”
Rain said it has over 7,500 4G base stations providing mobile and fixed broadband services and over 1,500 massive MIMO 5G base stations.
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Its network covers over 6 million homes, and Rain said it has one of the largest Stand Alone 5G networks globally.
“In 2021, Rain bought a substantial proportion of the 5G routers sold globally to enable its customers to connect their homes to its 5G network,” the cellular network operator stated.
“The number of combined rain and Telkom sites will be equivalent to that of Vodacom and MTN, and the avoidance of duplication would result in material capital and operational cost savings.”
Rain CEO Brandon Leigh said they had seen substantial growth and acknowledged that this caused early customer service teething problems.
“We had explosive growth in customers but also significant teething problems with customer service as our call centre was overwhelmed,” Leigh stated.
“Whilst we have been increasing our network’s coverage and capacity, we have also been focused on scaling up our customer service team and building modern customer management systems to bring this under control, and we believe we can handle the expected future growth.”
Rain chairman Paul Harris said there is great potential for a merger with Telkom to unlock growth opportunities.
“Rain’s prospects as a niche player are great. However, the option to combine forces with Telkom would take the merged company to the next level and benefit both Telkom and rain stakeholders,” said Harris.
“It is a pro-consumer option in line with Government policy, and the business case looks compelling.”
Source: News 24
