Rain intends to be a “player of note” in South Africa’s fixed and mobile broadband market, according to African Rainbow Capital (ARC) co-CEO Johan van Zyl.
During ARC’s annual financial results for the year ended 30 June 2022, Van Zyl also noted that Rain already has a substantial foothold in the fixed broadband space.
“We are going to be a future player of note, in fixed and mobile spaces,” he said.
“We already have substantial market share in the fixed space. We had a bit of a run-up front where we didn’t have much competition regarding 5G.”
“There are now several competitors, but we haven’t seen demand for our products decline,” he added.
Van Zyl’s words were in response to a question regarding the recently published Telkom acquisition statement Rain was ordered to retract.
He said that, as a minority shareholder in the mobile operator, he could not provide specific details on Rain’s intentions regarding Telkom.
ARC will provide more details when the time is right, he assured.
“We are in discussions as a board on the way forward. We clearly see some opportunities,” Van Zyl said.
“When the time is right, we will come with announcements to provide more details. We are well placed to be part of the opportunities in the sector,” he added.
Rain released a statement regarding a proposed offer to merge with Telkom on 11 August 2022.
“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 network operator said.
Rain believes that a merger with Telkom could create a 5G powerhouse and strong competitor to the Vodacom and MTN “telco duopoly”.
The company said there is a strong case for a Telkom-Rain merger, adding that it offers a better, competition-stimulating alternative than government selling Telkom to MTN.
“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 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.”
Shortly after Rain released its statement, South Africa’s Takeover Regulation Panel ordered Rain to withdraw it.
“The Takeover Regulation Panel (TRP) has noted, with grave concern, a press announcement issued by Rain … regarding a potential offer to merge with Telkom,” it said.
“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.”
“Furthermore, the announcement was issued notwithstanding the TRP’s instructions to Rain that no such announcement should be made without the prior approval of the TRP,” it added.
The TRP said Rain’s publication of the announcement was unlawful.
“Rain has been instructed to retract the announcement,” the TRP said.
“In the circumstances, all parties (i.e., shareholders) and the market are advised to disregard the announcement.”
The cellular network operator didn’t immediately retract its statement. Instead, it sought legal advice and hoped to “engage constructively” with the TRP over the matter.
“Clearly, should our engagement with Telkom give rise to a potential transaction, we will fully comply with all legal obligations,” Rain CEO Brandon Leigh said.
Rain retracted the statement on 16 August 2022.