Bharti calls off merger talks with South Africa’s MTN (Lead)

May 24th, 2008 - 9:15 pm ICT by admin  

New Delhi, May 24 (IANS) The talks between India’s leading telecom company Bharti Airtel and South Africa’s MTN to create the world’s sixth-largest mobile phone company in a deal said to be worth $45 billion has been called off, it was announced Saturday. “Discussions were on till late last night without a breakthrough. Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN,” the company, promoted by billionaire-entrepreneur Sunil Bharti Mittal, said in a statement.

The two companies were unable to come to an understanding on what the structure of the new enterprise will be, Bharti officials said. “MTN has now presented a completely different structure from what was agreed.” the company said.

Bharti was looking at MTN for its 70 million customers spread across 21 countries, including South Africa, Nigeria, Iran and Cyprus. The company’s balance sheet was also attractive, with a net profit of $1.58 billion on revenues of $9.62 billion.

Bharti Airtel itself has around 65 million customers with a net profit of $1.67 billion on revenues of $6.76 billion last financial year.

“Bharti’s vision of transforming itself from a home grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti,” the company said.

“Throughout the process, the discussions amongst the bankers and the two companies were cordial and conducted in good faith,” Bharti said, adding it was wishing MTN “the very best”.

The two groups were considering several options options, including a 51-percent buy-out of MTN by Bharti while still retaining its listing on the Johannesburg Stock Exchange (JSE).

The other option was an outright acquisition of MTN with a cash and share offer to shareholders, with a secondary listing on the exchange for Bharti Airtel.

“An in-principle agreement was reached May 16 and a term sheet was initialled between the two lead bankers. This agreed term sheet was presented to the MTN Board May 21,” the company said.

“Bharti would like to thank over a dozen Internationally reputed bankers from the US and Europe who have given confident letters of funding of over USD 60 billion,” the company said.

“Bharti remains keen to expand in the international arena and will continue to look at opportunities that are consistent with its vision to be a true Indian company that plays a significant role in transforming global telecommunications.”

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