Bharti - deal with MTN abandoned

Bharti Calls off Talks with MTN, Scuttling Plans for Telecom Giant

India's Bharti Airtel Ltd. Saturday called off its merger talks with South African telecommunications major MTN Group Ltd., saying that the deal structure proposed by MTN was "unacceptable."

A successful deal would have created the world's sixth-largest wireless telecommunications concern, bringing together two major mobile players operating in emerging markets in different parts of the world, with a combined market value of nearly $80 billion and more than 130 million customers across Asia, Africa and the Middle East.

"MTN has now presented a completely different structure from what was agreed," Bharti, India's largest telecom company by subscribers, said in a statement. "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 (Singapore Telecommunications Ltd.), in exchange for a controlling stake in MTN."

"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," Bharti said.

Bharti Airtel said May 5 that it was in exploratory talks with MTN and said May 6 that it hadn't made any offer to acquire MTN, neither in whole nor in part.

The talks had come at the invitation of the MTN board to explore the possibility of combining the two telecom giants, Bharti said.

"An in-principle agreement was reached on May 16 and a term sheet was initialed between the two lead bankers. This agreed term sheet was presented to the MTN board" on May 21, Bharti said.

This was followed by the revised MTN proposal.

"Bharti's vision of transforming itself from a homegrown Indian company to a true Indian multinational telecom giant, symbolizing the pride of India, would have been severely compromised, and this was completely unacceptable to Bharti," the Indian company said.

It said the talks continued until late Friday night without a breakthrough, which led to Bharti calling off the negotiations.

Bharti said the price for a possible transaction had also been agreed upon at the start of the talks, adding that it already had letters of funding of up to $60 billion.

It said it is "keen" to expand in the international arena and will continue to look at opportunities that would help to transform itself into a global telecom company.

MTN officials couldn't be immediately reached for comment.