Bharti-MTN mega deal called off
TIMES NEWS NETWORK New Delhi: After several months of frenzied negotiations, the proposed $23-billion deal between Indian telecom major Bharti Airtel and South Africa-based MTN was called off on Wednesday, as the South African government rejected the deal in its current form. A Bharti Airtel statement said, “In view of this, both companies have taken the decision to disengage from discussion. However, Bharti will continue to explore international expansion opportunities that are consistent with its vision and bring value to its shareholders.’’ * MTN scrip dips after deal’s scrapped * New Delhi: Ultimately, the South African government’s insistence on dual listing of both companies—Bharti Airtel and MTN—in India and South Africa proved a dealbreaker, as this would have amounted to capital account convertibility. The South African government said, “MTN advised the (finance) minister that the two companies have mutually decided to terminate further discussions on the proposed merger, as they were not able to conclude all outstanding matters to enable the transaction to proceed.’’ The scrapping of talks led to a crash in MTN’s share price on the Johannesburg Stock Exchange. On Wednesday, MTN’s share price fell by 5.5% from its day’s high of 126 rand to around 122 rand, which prompted a halt to trading in the scrip. Since the announcement of the proposed deal on May 25, the share price of MTN went up by around 7%. Not only this, the value of the South African currency, rand, also has fallen sharply. A source said the deal would have led to a huge inflow of FDI in South Africa. In fact, this would have been the largest ever foreign direct investment in the country. But now, with the deal being called off, the foreign fund inflow would be affected. However, on the other side, Indian investors feel that the calling off of the deal would push Bharti’s share price up. Since the announcement of the deal, Bharti’s share price remained listless despite the fact that during the period, the sensex jumped by 23%. In fact, compared to the share price prevailing a couple of days before the announcement of the start of the negotiations, Bharti’s share price fell. Under the deal, Bharti would have acquired 49% stake in MTN and MTN 25% in Bharti. Besides this, the net cash outflow from Bharti would have $ 4.1 billion. This is the second time in just over a year when Sunil Mittal-led Bharti Airtel has been forced to abandon talks for amalgamation of the two organisations. The statement issued by Bharti said that the broad structure being discussed by the two sides had taken into account the sensibilities and sensitivities of both companies and both their countries. Despite failure in the two round of discussion, Bharti has not quit hope. It said, “We hope the South African government will review its position in the future and allow both companies an opportunity to re-engage.’’ * Is marriage with MTN jinxed? *New Delhi: Marriage with South African telecom giant MTN appears to be a jinxed affair for an Indian corporate entity as the engagements have been called off for the third time. While Bharti Airtel for the first time called off the negotiations in May last year accusing MTN of changing the deal structure at the last movement contrary to their commitment, another suitor Anil Ambani-led RCom was forced to beat a retreat two months later under pressures from elder brother Mukeshcontrolled RIL. As the talks between RCom and MTN were progressing for possibly a reverse merger, RIL threatened legal action in case the South African entity went ahead with the deal citing that it had the first right of refusal for controlling stake in Anil Ambani group firm. Once again Sunil Mittal-led Bharti picked up the threads from where it left and started negotiations in May before being forced to announce on Wednesday an end to the talks after failing to get the approval of the South African government for the deal. AGENCIES --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
