MTN-Bharti tie-up doomed from start on dual listing

Were the negotiations in the $23 billion (Rs 110,000 crore) deal between Bharti Airtel and MTN merely a process of going through the motions?

Were the negotiations in the $23 billion (Rs 110,000 crore) deal between Bharti Airtel and MTN merely a process of going through the motions?

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Apparently, the management of Bharti Airtel and MTN CEO Phuthuma Nhleko were both aware that the deal structure announced by them on May 25, would not be acceptable to South African government.

The MTN board was divided right from the beginning, a senior official close to the developments said. One section objected that the new entity, operating in South Africa, did not meet the criterion of being a South African company. This would have been satisfied, had Indian laws permitted dual listing, under which shares can be listed in two countries and traded in any currency.

But the Indian government was clear that dual listing could not be permitted as it required full currency convertibility.

The South African government’s support was critical for the deal as the country’s biggest pension fund manager, the Public Investment Corporation, controls a 21 per cent stake.

The director general of the South African treasury had written to Nhleko on September 11 that the government would only approve the deal if it has “DLC (dual listed company) structure” and “MTN will remain domiciled and headquartered in South Africa, post-transaction.”