Telkom Gets Takeover Proposal

South African fixed-line operator Telkom (TKG) said it has become a possible takeover target and, as a result, may sell a portion of its stake in wireless company Vodacom Group, its joint venture with Vodafone (VOD).

Telkom said in a note to shareholders that it received a letter Friday from a consortium of investors interested in acquiring the company. The investment group includes Mvelaphanda Holdings, Och-Ziff Capital Management (OZM) and other so-called strategic funders. Telkom said the consortium's offer is conditional on the company's ability to unload its entire 50% stake in Vodacom.

"The Board of Telkom, in accordance with its fiduciary duties, will evaluate all bona fide offers with a view to [maximizing] shareholder value," the company said. "No transaction will be entered into without requisite shareholder approvals."

As luck would have it, Telkom also said it has received a nonbinding proposal from Vodafone to acquire a portion of Telkom's stake in Vodacom, subject to the company unbundling its remaining stake in Vodacom to Telkom shareholders. Those discussions over Vodafone buying a majority stake in Vodacom began on May 14, Telkom said.

Telkom was lately up $4.79, or 6.7%, to $76.80. Vodafone shares, meanwhile, were down 50 cents, or 1.6%, to $31.59. Och-Ziff Capital was off 0.6% at $20.52.

The moves for Telkom's assets come a week after Africa's largest wireless operator, MTN Group, was said to be working on a merger deal with India's Reliance Communications, according to The Wall Street Journal. Those talks began after MTN ended merger talks with another larger Indian telecom operator, Bharti Airtel.

The possible South African shakeups come right as Chinese telecom operators are in their own state of flux, with six state-owned entities condensing into three in order to compete better with China Mobile (CHL), which has the largest subscriber count in the world.

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