Euphoria over MTN-Bharti transaction wanes in South Africa
May 27th, 2009 - 3:36 pm ICT by IANSBy Fakir Hassen
Johannesburg, May 27 (IANS) Analysts here, who were initially enthusiastic over the transaction between mobile phone giants Bharti Airtel of India and South Africa’s MTN, have turned cautious after share prices of both companies dropped Wednesday.
MTN fell 4.46 percent and Bharti went down for the second consecutive day May 26, following an announcement Monday by the two that they were in discussions for a cross-ownership deal that could see the biggest mobile giant straddling Africa, India and the Middle East.
Analysts Tuesday were trying to figure out whether the transaction presented any value for MTN shareholders, the Afrikaans daily Beeld reported.
According to Richard Hurst, head of Africa Communications at the Industrial Development Corp, the transaction could lead to long-term higher earnings for MTN shareholders.
“But in the short term, it probably does not look as good as it should be,” Hurst told Beeld.
Another unnamed analyst expressly called for MTN and Bharti to review the conditions of the transaction to obviate concerns over the insecurity stemming from the cross-shareholding agreement that has been proposed.
MTN will get a 25 percent stake in Bharti for $2.9 billion and through issuing new shares equal to 25 percent of its share capital.
Bharti proposes to buy 36 percent of the South African company by offering shareholders half a Bharti share and 86 rands (Rs.497) for each MTN share, a premium of about 35 percent on MTN’s closing price May 22 of 119 rands (Rs.687).
But analysts said the value of MTN shares could be diluted through issuing new shares.
They also expressed concern that if the Bharti scrip continues falling, the offer to MTN shareholders will also decrease.
- Caution sets in over proposed Bharti, MTN telecom pact (Lead) - May 27, 2009
- MTN says deal with Bharti to create giant from India to Africa - May 26, 2009
- MTN-Bharti deal could create telecom giant straddling India to Africa (Lead) - May 26, 2009
- Prime Minister supports Bharti-MTN deal - Sep 26, 2009
- After Reliance failure, MTN could still target Indian market - Jul 23, 2008
- Bharti starts 40-day talks to acquire Kuwait's Zain - Feb 15, 2010
- Bharti redials for strategic ties with South Africa's MTN (Roundup) - May 25, 2009
- India's Bharti makes grand entry into Africa's telecom market - Mar 31, 2010
- S African mobile giant MTN faces 'identity crisis' in Bharti deal - Aug 30, 2009
- Bharti shares open strong after Zain Africa deal - Mar 31, 2010
- MTN-Bharti plans could be hit by Iran mobile clampdown - Jun 24, 2009
- Kuwait's Zain approves Bharti's bid to connect with Africa (Lead) - Mar 25, 2010
- India's new takeover norms may scuttle Bharti-MTN deal - Sep 22, 2009
- MTN gets upgrade, but Reliance talks hit share price - Jul 04, 2008
- Bharti, South Africa's MTN extend alliance talks to Aug 31 - Aug 03, 2009
Tags: beeld, bharti airtel, earnings, euphoria, fakir, hassen, insecurity, johannesburg, mobile giant, mobile phone, mtn shareholders, percent stake, phone giants, rands, richard hurst, scrip, share capital, share prices, shareholding, south africa
