The “runaway bride” lived up to its reputation. The proposed alliance between Bharti Airtel and South Africa’s MTN has fallen through. This time round, however, the blame could land on the respective governments’ doors.
MTN is seen to be the pride of South Africa. The country’s communications minister Siphiwe Nyanda had earlier said that “MTN is a family jewel” and “should remain a domestic company”. A position that of South African government and politicians have maintained.
The original deal structure announced by the two companies in May 2009 said that Bharti Airtel would acquire a 36 per cent ‘economic interest’ in MTN for $6.9 billion (Rs 33,000 crore). Besides, MTN will also offer fresh shares to Bharti, taking its shareholding to 49 per cent.
In return, MTN will acquire 25 per cent ‘economic interest’ in Bharti Airtel for $2.9 billion (Rs 14,000 crore) and MTN shareholders will acquire another 11 per cent through a global depository receipts (GDR) issue.
With Bharti Airtel becoming the largest shareholder with a 49 per cent stake in MTN, the biggest challenge was to convince the South African people and its government that the new entity was a South African entity in South Africa.
Complicating the matter further was the South African government’s demand for ‘dual listing’ — when a single company is listed in two countries and the shares are traded in any currency. This is not permitted under Indian laws, as it would make the Rupee fully convertible. As a result, a section of MTN board opposed this structure, a fact pointed out by Hindustan Times on September 18.
Runaway Bride is a 1999 romantic comedy film in which Julia Roberts plays a spirited and attractive young woman who, afraid of being married, leaves a trail of boyfriends.