(Bloomberg) -- MTN Group Ltd., which is talks to buy Telkom SA SOC Ltd., is questioning a proposal from another telecoms company that’s asked Telkom to acquire it.

Rain Group Holdings Pty Ltd. has offered to sell itself to Telkom in return for newly issued shares, the company said in a statement on Friday.

MTN, which is still formalizing its own offer for Telkom, said separately that it’s waiting for a detailed response from the partly state-owned operator. The deal to combine MTN and Telkom would result in the country’s biggest mobile-phone operator by number of subscribers.

“A further announcement will be released by MTN, setting out its position with regards to the future of the transaction,” MTN said.

Telkom shares fell 3.5% as of 12:58 p.m. in Johannesburg, valuing the company at 22.9 billion rand ($1.3 billion). MTN, which has dropped 12% since its July 15 offer for Telkom, was little changed. 

“Rain’s attempt to crash the South African telecom M&A party with its approach to Telkom for a merger makes MTN’s approach to Telkom for an-all share deal even more complicated,” said Bloomberg analyst John Davies. “It extends the uncertainty for Telkom and MTN and complicates any upcoming spectrum auction,” he said. 

MTN is flush with cash -- after a multi year asset-disposal program -- and is looking to strengthen its position in its core African markets. A combination with Telkom would close the gap with rival Vodacom Group Ltd., South Africa’s market leader controlled by the UK’s Vodafone Group Plc. A recent spectrum auction made the continent’s most-industrialized economy even more attractive to operators.  



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