MTN says discussions are “at an early stage and there is no certainty that the transaction will be consummated”.
Telkom shares rose 30% following the announcement while MTN shares jumped around 5%.
MTN is Africa’s largest mobile network operator and the eighth largest in the world. Its footprint spans over 20 countries and it currently serves around 280 million customers.
Telkom is majority-privatised, with it being 39% state-owned, while another 14.8% is owned by the Public Investment Corporation (PIC), which is closely linked to the government.
The South African government is yet to comment on speculation surrounding the talks.
The potential acquisition would bolster MTN in its home market as it goes head-to-head with Vodacom Group in the race to provide 5G connectivity throughout the country.
In March, South Africa completed its long-delayed radio frequency spectrum auction with MTN and Telkom gaining spectrum in the 800MHz band.
Telkom initially wished to delay the auction, filing an application that asks the Guateng High Court to review and set aside the invitation to apply.
The Court outlines auction rules, spectrum bands and license obligations that were set out by the country’s regulator ICASA.
