South African investment firm Toto Consortium has made a $433 million (~R7 billion ) offer to purchase the government’s 40.5% stake in the country’s third largest mobile network operator, Telkom.

According to the offer letter, which was seen by Bloomberg and dated July 24, the investment firm’s valuation of Telkom is based on a 30-day average share price of the company, plus a 20% black empowerment discount.

“The offer is subject to the satisfactory conclusion of a due diligence of Telkom [and] we [Toto] are not averse to collaborating with other stakeholders,” the firm stated in the letter signed by chairman Bongani Gigaba.

Toto also mentioned that it had access to funding for the deal and that it took a long-term view on its investment approach in Telkom and had no predetermined plan to dilute and/or exit the investment.

Commenting on the offer, South Africa’s communications minister Khumbudzo Ntshavheni stated in a written response to Bloomberg that the government had at the moment no plans to sell its stake in Telkom and that should that stance change, it will communicate.

Toto Consortium becomes the latest entity to express an interest in Telkom since the company announced in July that it was in talks of possibly getting acquired by South Africa’s second-largest mobile network operator MTN. 

Just yesterday, South African mobile-data-only network Rain announced that it had made a formal request for a merger with Telkom. Rain has since been ordered to retract its announcement by the country’s mergers regulator Takeover Regulation Panel which deemed it unlawful.

The Telkom offer will be Toto’s second attempt at acquiring a stake in a state-owned entity, having made an offer to acquire the government’s 51% stake in national airline South African Airways. Toto was rejected in favour of Takano Consortium which managed to purchase the ownership stake for $3 (yes, 3 dollars).

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