A year ago, talks of a merger between India's No. 1 cell-phone company, Bharti Airtel Ltd., and Africa's No. 2 operator, MTN Group Ltd., fell apart. After that happened MTN looked to a deal with Indian No. 2 Reliance Communications Ltd., but that didn't work out either.
Bharti-MTN deal talk fell apart last year due to a disagreement over the structure of the deal as Bharti didn't want to become a unit of MTN. Now the two seem to be on the same page and have returned to early-stage merger talk that would create a company with a market cap of about $60 billion.
On deal terms, Bharti would acquire 49% of MTN, which passed the
100 million subscriber mark this month. MTN and its shareholders would acquire about 36% of Bharti. Bharti said Singapore Telecommunications Ltd., which owns about 31% of
Bharti, will continue to be a strategic partner and significant
shareholder after any deal.
A Reuters report
noted that Indian Finance Minister Pranab Mukherjee welcomed the deal. Investors aren't all that keen on the transaction, though. Since its merger talk announcement, Bharti shares have continued to decline over a possible need to raise about $4 billion in cash to follow through with the deal. Bharti doesn't feel
the fundraising will be onerous. Dow Jones cited a source saying SingTel
doesn't plan to fund any part of a deal with MTN.
For the
full story/analysis on these talks, see The Deal Pipeline (subscription required). -
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