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Bharti Airtel disengages merger talks with MTN

NEW DELHI: Bharti Airtel on Saturday announced that it had decided to disengage from the merger talks with South Africa-based telecom giant MTN after the latter deviated from the agreed terms decided during ‘exploratory discussions’.

The talks began earlier this month with Bharti Airtel looking into the possibility of combining the two ‘emerging market’ telecom giants. But the latest proposal from MTN asking Bharti Airtel to become its subsidiary irked the Indian telecom firm, forcing it to disengage from the talks.

Giving details of the negotiations held so far between the two telecom firms, Bharti Airtel said: “At the invitation of MTN Board, Bharti entered into exploratory discussions on the possibility of combining the two ‘emerging market’ telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. An in-principle agreement was reached on May 16 and a term sheet was initialled between the two lead bankers. This agreed term sheet was presented to the MTN board on May 21.”

“MTN has now presented a completely different structure, from what was agreed. This new structure envisages Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel (Singapore-based telecom firm that holds 30.5 per cent stake in Bharti Airtel), in exchange for a controlling stake in MTN,” it said.

“Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity. Further and more importantly, Bharti’s vision of transforming itself from a home-grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti Group,” the statement said.

Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN. Throughout the process, the discussions among the bankers and the two companies were cordial and conducted in good faith. The reference price at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point.

“This is in line with Bharti’s highly disciplined approach towards any acquisition and consistent with Bharti’s philosophy that it will not engage in a bidding war at any stage.

“Bharti would also like to thank over a dozen internationally reputed bankers from the U.S. and Europe who have given confident letters of funding of over $60 billion,” it added.

Bharti Airtel-MTN merger would have created world’s sixth-largest mobile operator with over 13-crore subscribers having presence in 24 countries.

MTN has over 6.8-crore subscribers mostly in African nations and Middle-East, while Bharti Airtel over six-crore mobile customers.

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