MTN-Bharti talks collapse again at the eleventh hour
Published: 1 October, 2009
READ MORE: India | Bharti Airtel | MTN | Cellular
The deadline for exclusive merger talks between India's leading cellco, Bharti Airtel, and African group MTN, expired yesterday, and for the second time, the two firms called off negotiations about creating a new powerhouse with 200m subscribers and $20bn in revenues.
Bharti and South Africa-based MTN have been talking since May, when they revived talks that had failed in 2008. The current discussions were originally set to end on July 31, but have already been extended twice. As we went to press, the South African Treasury told Reuters: "MTN advised the Finance Minister that the two companies have mutually decided to terminate further discussions on the proposed merger, as they were not been able to conclude all outstanding matters to enable the transaction to proceed."
The prize at stake was an empire that would span many of the world's fastest growing mobile markets in India, Africa and the Middle East, but there were many obstacles, including South African fears that MTN will lose its national identity and brand. There were also regulatory concerns in India over a proposed dual listing, which would not currently be legal for Indian firms, and which was reportedly proposed by MTN as a way of keeping its national standing.
Under the initial proposal outlined in May, MTN and its shareholders would have taken a 36% stake in Bharti while the Indian company would have held 49% of the pan-African operator. Bharti, which is controlled by the billionaire Sunil Bharti Mittal, then increased the cash component of its offer to $10bn from an original $7.6bn, according to reports, and also offered $4bn in stock, 7% more than it first tendered for its 49% stake.
However, a new setback came last week when India amended its takeover rules, requiring a company buying 15% of an Indian firm through American Depositary Receipts or Global Depositary Receipts, with voting rights, to make a mandatory offer for a further 20%. That could have cost MTN an extra $7bn based on Bharti's market value of $33bn.
After last year's round of talks broke down, MTN entered exclusive negotiations with another Indian group, RCom, controlled by tycoon Anil Ambani, but again failed to agree a deal.
"Should the MTN-Bharti deal fall through, we would not be surprised to see MTN involved in other transactions ... MTN might even be able to pursue a strategy of making acquisitions," Citigroup analysts said in a research note, citing the possibilities of renewed talks with RCom, or even a deal with China Mobile, which is in expansionist mode. MTN could also seek a partnership with Kuwait-based Zain, which also has pan-African mobile operations, but has been looking to sell these. Its own talks with partners like Vivendi have also fallen through.
Pages: 1 | 2
More INDIA News
More BHARTI AIRTEL News
More MTN News
COMMENTS
Carrier Broadband Performance: Africa & Middle East
Carriers are using mobile broadband as their weapon of choice in the fight against the commoditization of voice and falling ARPU. This...
Voice over LTE: Market Analysis and Forecasts
VoLTE offer unique advantages in lowering a carrier's voice infrastructure economics and promises to improve voice quality, device...
Satellite Phones: Will Dual Mode Help the Phoenix Rise from the Ashes?
Satellite phones have followed an arduous path since their much-hyped launch more than a decade ago. The hype was followed by an e...
