The proposed deal involving a complex alliance between India’s largest telecom service provider Bharti Airtel and South Africa-based MTN may be completely restructured from what the two companies announced on May 25, sources familiar with the deal said.
Bharti Airtel had announced that MTN and its shareholders would acquire an economic interest of about 36 per cent in Bharti, of which 25% would be held by MTN and the remainder by MTN’s shareholders Bharti would acquire about 49 per cent shareholding in MTN.
A source connected with the deal said that some directors of MTN want that the whole deal to be restructured so that there is more value in it for the MTN shareholders and added that the deal was moving “in the right direction.”
“Please note that MTN does not comment on market speculation,” said a spokersperson for MTN. “At this stage, MTN has nothing further to add to the announcement issued to the market on 3 August 2009. Discussions are still in progress and both parties have agreed to extend the exclusivity period (for merger talks) until up to 31 August 2009.”
Bharti Airtel also declined to comment. “Beyond what we have already communicated in our press note, we have no further comment to offer at the moment,” said a Bharti Airtel spokesperson.
“Such mega deals need very innovative structuring that are often done for the first time,” said Subodh Agrawal, chairman of Euromax Capital, a London-based investment bank with special focus on India and Africa. “This is a very challenging transaction, but he being the master dealmaker, I have confidence that Sunil Mittal (Bharti chairman) can pull it off given an appropriate time period.”
Earlier, the announcement said that MTN was offering $2.9 billion in cash and 25 per cent of its own equity to acquire 25 per cent economic interest in Bharti. MTN shareholders would buy the remaining 11 per cent of Bharti. Bharti, in turn, said it could pay 86 rand ($10.32) per share in cash and give 0.5 share of Bharti for every MTN share as GDR to be listed on Johannesburg Stock Exchange.