New Delhi, Aug 3 (Inditop.com) Bharti Airtel and South Africa’s MTN Monday said they were extending their talks for a proposed $23-billion financial alliance till Aug 31, having failed to reach a pact within the earlier deadline that had expired Friday.
“No decision or agreement to acquire any shares or implement the potential transaction outlined above has yet been made by the boards of either MTN or Bharti,” the South African telecom company said in a statement.
“Shareholders are advised that the discussions between the parties regarding a potential transaction are continuing and both parties have agreed to extend the exclusivity period until up to 31 August 2009,” said the statement.
“The discussions may or may not lead to any transaction and the structure and terms of the potential transaction may be adjusted to reflect further discussions between the parties.”
The potential transaction between the two companies is proposed to create a leading telecom service provider group, aligning Bharti’s market-leading Indian business with MTN’s growing African and Middle Eastern operations.
Telecom sector trackers didn’t see anything amiss in the extension of talks, maintaining that the process was taking time.
“It’s just that the process is taking a longer time but I have no reason to believe there are any hiccups,” said Mahesh Uppal, director of telecom consulting firm Com First.
“This is a very complex transaction. Both companies have several issues and come from markets its partner is not familiar with,” Uppal told Inditop.
Bharti Airtel chairman Sunil Bharti Mittal had recently told a news channel that reports of the two companies not being able to finalise the management structure was not true.
Moreover, both the telecom firms would retain the current management structure and operate as separate companies until they were able to implement a full merger within the next couple of years, he had said.
“There’s a very good management team there which is very successful. We have no intention of making any changes there,” Mittal had added.
Bharti proposes to buy 36 percent of the South African company by offering shareholders half a Bharti share, whereas MTN will get a 25 percent stake in Bharti for $2.9 billion and through issuing new shares equal to 25 percent of its share capital.
Singapore Telecom, a major existing shareholder of Bharti, will continue to be a strategic partner and hold significant shareholding after the implementation of the potential transaction.
Bharti had ended talks with MTN last year, rejecting the proposal that would have made the Indian firm a subsidiary of MTN. Following that, the South African group started negotiations with the Reliance Anil Dhirubhai Ambani Group, which also failed.
However, Bharti and MTN started negotiations again May 25 this year to forge an alliance that would make it the biggest deal ever in the industry.
Earlier this month, the market regulator had permitted Airtel and MTN to go ahead with their proposal to buy each other’s shares in a $25 billion deal without the latter having to make an open offer in Indian equities markets.
Last week, responding to a question on whether a deal had been finalised, Corporate Affairs Minister Salman Khurshid told parliament that any move to change Bharti’s shareholding structure would require government approval.
Both Bharti and MTN have over 100 million subscribers and the deal will make the combined entity among the top five telecom service companies in the world, with annual revenues of $20 billion.
