MTN Group commenced talks to acquire domestic rival Telkom South Africa, a tie-up which would help it step up competition with the local unit of Vodacom, the market leader by connections.

A statement on the Johannesburg stock exchange confirmed early stage discussions between MTN and Telkom, although the pair added that there was no certainty a transaction would be completed.

Telkom is partially state-owned: MTN stated it would pay for the operator through shares or a stock and cash combination, should talks advance.

Solidifying its position in its home market would be a natural step for MTN, after it embarked on an asset-disposal programme over the last two years for areas of its business deemed non-core.

Aside from cutting its debt load, the company said it would also use cash raised to focus efforts on Africa.

However, a deal to acquire Telkom would certainly come with regulatory issues, as it would pretty much give MTN a leading status in the country.

Telkom is South Africa’s third-largest operator, with GSMA Intelligence estimating it had 16.8 million connections in Q2 compared with MTN’s 39 million and 51.4 million for Vodacom.

A tie-up would also benefit MTN in rolling out 5G and boosting 4G, after both it and Telkom picked up spectrum in the country’s recently completed auction.

Bloomberg first reported MTN held an interest in acquiring Telkom in 2021.