"Speculation rife that Bharti, MTN talks deadlocked"

EVEN as Bharti Airtel maintained that talks with South Africa’s MTN were still continuing, speculation was rife in Delhi that talks between both companies had reached a stalemate. While ET has not been able to verify the authencity, unconfirmed rumours doing the rounds in Delhi late on Friday night, said that both companies were expected to make an announcement shortly that talks were being postponed to a later date.

Both companies would use the interim period to address the regulatory and legal hurdles that confronts the deal, industry sources here said. Industry sources in Delhi also quoted bankers in London who are close to the developments as admitting that whether it be a buyout or merger, Bharti would first have to workout the corproate structure of the combined entity in such a way that it confirms to the existing regulations in both countries. They also quoted bankers as saying that both companies had not called off talks, but had decided to put them backburner in order to give Bharti time to work address all hurdles.

However, when contacted, the Bharti spokesperson rubbished these rumours and said that talks between both companies ‘were still on’, while adding that the company (Bharti) had nothing further to state. It must be pointed out that ET has not been able to establish if these rumours are true. Besides, ET also categorically states that industry sources here who tipped the paper of this development are not associated with Bharti Airtel. It must also be clarified that ET has not been able to reach any of Bharti’s top management to verify if these rumours are true.

"MTN to buy back share, AGM on Jun 19"

MTN, which is in merger talks Bharti Airtel, has decided to buy back 10% of its share capital. The South African telco will move a special resolution at its annual general meeting on June 19.

The Johannesburg-based company will also seek shareholders’ permission to authorise its board to sell 10% of its unissued share capital at a price to be determined by its board. It had passed an ordinary resolution to this effect at the last AGM. In the absence of any move in this direction, the authority given to the board is slated to lapse at the next AGM. The company now proposes to extend it for another year.

While the rationale for the proposed capital decisions is unclear, companies abroad often buy back shares to hold these as treasury stock instead of cancelling the shares as Indian companies are required to do. After the scrip gets repriced in the market following the buyback, these shares are sold at a higher price.

Industry sources said the proposed restructuring of share capital is linked to the company’s plans to merge with Bharti Airtel.

"Now, MTN chief hints at an European bidder"

But Analysts Say It Could Be A Tactic To Press Bharti For Better Price


THE South African telco MTN, which is discussing a merger with Bharti Airtel, is tempted by opportunities in Asia and wants to play a larger role in the mergers and acquisitions of the Asian telcos without ruling out the possibility of a third bidder, mainly a European one, joining the fray. In an exclusive interview to Wirtschaftswoche, a German magazine, MTN CEO Phuthuma Nhleko said: “We are open to opportunities in Asia. I predict more mergers in future in those countries. And we want at this stage (to) play a role.”

Asked whether any other company, in addition to Bharti, will launch a takeover bid, he did not completely rule out the possibility. He said, “European telecom companies in Africa have a general interest. I, therefore, cannot exclude in the future renowned telecom companies expressing an interest. We are a public company. And there is always the possibility that the shareholders (get) a lucrative takeover bid, without the involvement of the senior management.”

So far, only Etisalat has said it was evaluating a possible bid for MTN. China Mobile had said it was interested in the South African market, but not weighing the option of bidding for MTN. Many analysts said French Telecom could be an interested party. In a recent research report, JPMorgan observed that Saudi Telecom would not let “MTN go without taking a look at the company.” The report said another potential bidder could be Orascom Telecom. The rationale for Orascom is to acquire growth in Africa and re-establish a presence in the Middle-East, it said.

The interview of Mr Nhelko, who has been instrumental in expanding MTN’s operations in 21 countries with 68 million subscribers, was published on Saturday, barely a few days after he had second round of discussions with the top management of Bharti.

He met the Bharti top brass around May 7-8 in London, after both the firms announced that they were in “exploratory talks.” Bharti took this a bit ahead on May 13, saying “the discussions being held are aimed at combining the strengths of the two leading emerging markets players and, accordingly, veering towards possible structures to achieve this objective.” Bharti, however, put the cautionary disclaimer: these discussions may or may not lead to any transaction.

However, a section of analysts felt that Nhleko’s ambitions in Asia and his anticipation of an European company bidding for MTN might not gel well. “It could be a tactic to press his asking price through the Bharti management,” said a veteran investment banker.