Bharti Airtel Pulls Out Of MTN Acquisition Talks

26th May 2008

India’s leading mobile phone operator, Bharti Airtel, has ended takeover talks with South African mobile operator MTN, the British Broadcasting Corporation said in an online report on Sunday.

Negotiations broke down after the two companies failed to agree on the structure of the combined entity, according to Bharti. A tie-up would have created the world’s sixth-largest mobile phone operator with more than 130 million subscribers. MTN is now holding talks with Bharti’s domestic rival, Reliance Communications about a deal, press reports suggest.

Kuwait’s Etisalat Communications was also said to have been interested in taking over MTN, which has operations in several African countries including Nigeria. New Delhi-based Bharti said that a price for MTN shares had been agreed and it had secured funding of more than $60bn from more than a dozen United States and European banks. But the firm abandoned its plans to buy MTN after the South African company proposed a different merger structure from the one that had been originally agreed.

This would have seen Bharti Airtel become a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singapore telecoms group, Singtel, in exchange for a controlling stake in MTN. “Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel, and also would not capture the synergies of a combined entity,” Bharti said in a statement.

“Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN,” it added. Bharti’s departure opens the door for other telecoms groups to make a bid. Sub-Saharan Africa is one of the world’s fastest growing markets for wireless services and MTN is the biggest operator in that market.

Source: Punch

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