Bharti Airtel, India’s largest mobile operator, is expected to make a formal offer for South African telecom operator MTN next week.
Even as Bharti Airtel Chairman Sunil Mittal and MTN CEO Phuthuma Nhleko have been holding discussions in London to clear hurdles in what could be India's biggest-ever foreign acquisitionl, top Bharti Airtel executives along with advisors-Standard Chartered Bank and Goldman Sachs - are working on the bid, according to investment bankers close to the transaction.
If Bharti makes the move next week, it could mark the beginning of a long battle to take control of MTN, which has 68 million customers spread over 21 countries in Africa and the Middle East. This is because telecom giants like China Mobile and Vodafone are expected to join the race.
“Once MTN board considers Bharti’s bid, many counter offers will follow. Even global telecom giants like AT&T and Deutsche Telecom may consider making an offer. This will bolster valuation,” said the managing director of the India arm of a global investment banking firm, requesting anonymity.
An Airtel spokesperson said:“We do not have any comments other than the one that both Airtel and MTN made two days ago.” Earlier, MTN and Bharti announced separately that they have initiated "exploratory discussions" that may or may not lead to a transaction.
Earlier this week, The Financial Times reported that Bharti Airtel might offer 165 rand a share, which would value the South African enterprise at $37billion. Bharti may place a bid for 51 per cent, it said. In that case, it may have to make an open offer.
The MTN's board, chaired by businessman Cyril Ramaphosa, would not like to be seen selling 100 per cent of one of South Africa's flagship firms to foreigners, The Financial Times said. While Alpine Trust, promoted by employees, owns 23 per cent stake in MTN, government-owned pension funds hold 13.09 per cent. The rest is with public and mutual funds.