SingTel – BT

Bharti revives MTN stake talks

SingTel won’t confirm its involvement in the new deal for South African telco

After a failed attempt last year, Singapore Telecom’s Indian associate Bharti Airtel is reviving talks to acquire a major stake in South Africa’s largest wireless operator, MTN Group.

Under the second round of negotiations, Bharti is tabling a deal with MTN that will result in part-ownership of each other’s companies, the Indian operator revealed in a statement yesterday.

Bharti is looking to acquire a 49 per cent stake in MTN by paying 86 South African rand and 0.5 newly issued Bharti global depository receipts for each MTN share.

MTN, on the other hand, will pay US$2.9 billion for a 25 per cent stake in Bharti and its shareholders will lay claim to an additional 11 per cent of the company.

‘Bharti and MTN have agreed to discuss the potential transaction exclusively with one another until July 31,’ Bharti said.

Bharti and MTN are the largest operators in their countries. The proposed union would create a telecom behemoth with more than 200 million subscribers and over US$20 billion a year in revenue.

A merger could also set a precedent as India’s biggest cross-border deal to date – at almost double the value of Tata Steel’s US$12.7 billion purchase of UK-based Corus in 2006, according to Thomson Reuters.

Bharti and MTN floated merger talks early last year but negotiations eventually fell through in May 2008 due to disagreement over how the deal should be structured.

MTN then held talks with Bharti’s local rival Reliance Communications, but the duo also failed to reach a consensus.

SingTel, which owns 30.5 per cent of Bharti, was reported to have been roped in for the first round of talks with MTN. Some media reports also said SingTel and Bharti were mulling a new joint venture for the MTN bid to avoid violating India’s regulations on foreign ownership.

When contacted, SingTel would not confirm its involvement in the new deal. ‘Talks are still in the early stages. SingTel, a major existing shareholder of Bharti, will continue to be a strategic partner and significant shareholder after the implementation of the potential transaction,’ a SingTel spokeswoman said.

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