(Associated Press) India’s Bharti Airtel Ltd. and South Africa’s MTN Group Ltd. have renewed merger talks, possibly opening the way for the creation of an emerging markets mobile phone giant with $20billion in combined revenues, the companies said in statements today.
Bharti would acquire a 49 percent stake in MTN, and MTN and its shareholders would acquire a 36 percent stake in Bharti through a complex cash and equity deal, Bharti Airtel’s statement said. The two companies, both leaders in their respective markets, have agreed to pursue exclusive discussions until July 31. Talks are still at an early stage, but if the deal goes through, the merger would result in a company with a customer base of more than 200 million, the statement said. It is not the first time the two companies have come to the table. Negotiations between Bharti and MTN over a possible merger foundered in May. MTN then opened talks with India’s Reliance Communications, but those talks collapsed in July. Bharti shares first surged on the news, but closed down 5.4 percent, at 811.4 rupees a share on the Bombay Stock Exchange. “The initial reaction was a little over the top,” said Angel Broking analyst Harit Shah. He said investors are worried about equity dilution and the “significant amount” of debt the company would take on under the proposed terms of the deal. Bank of America Corp. and Deutsche Bank AG are financial advisers to MTN, the South African company said in a filing.Bloomberg News contributed.
