By IANS,
New Delhi : Regulatory roadblocks remained unresolved for the proposed $24-billion equity swap-cum-strategic tie-up between Indian telecom major Bharti Airtel and South Africa’s MTN even as their deadline for exclusive talks was to expire Wednesday.
The developments are being closely watched by the global telecom industry as it has the potential to create the world’s third largest mobile phone company, just behind China Mobile and Vodafone Group.
The new entity will have a combined base of 207 million subscribers and revenues of some $20 billion.
“Let’s see! We may be issuing a statement later,” a Bharti official said Wednesday on condition of anonymity, as he was not authorised to speak. He indicated there could be a two-week extension of exclusive talks – the third since negotiations resumed in May.
A spokesperson for South Africa’s treasury also said a statement was likely Wednesday.
According to sources familiar with the developments, the main hurdle to the deal is dual listing of the post-alliance entity, which the South African authorities are pushing for, but the present Indian regulations do not permit.
The deal, worth some $24 billion in cash and equity, calls for Bharti to get 49 percent stake in MTN, while the South African company and its shareholders will get 36 percent equity in the Indian telecom major.
MTN needs the South African government’s nod for the deal as the state-run Public Investment Corp holds some 20 percent stake in the company. The South government there feels dual listing will help MTN retain its national character.
“We cannot merge two companies and still keep their identities apart,” India’s Corporate Affairs Minister Salman Khurshid told reporters here, referring to the prevailing rules and regulations within the country in the context of the deal.
“Nobody is against the growth of Indian companies. Obviously, people will be positive – our businesses are growing. But we have to be careful of the local conditions and the regulations,” he said.
Another stumbling block is a clarification by India’s markets regulator that any issue of overseas depositary receipts with voting rights will trigger the requirement of an open offer to existing shareholders if the holding crosses 15 percent.
“Both the prime minister (Manmohan Singh) and I have a very positive outlook towards the deal,” Finance Minister Pranab Mukherjee told reporters on the sidelines of a book launch here Tuesday evening. “We have discussed it.”
The two companies had begun a second round of fresh talks May 25 after they had called off negotiations last year. This time around, the Indian government has also openly lent its support to the proposal at the highest level.
“I did mention this to President (Jacob) Zuma. I sincerely hope the deal goes through,” Manmohan Singh had said at a a press conference on the margins of the G20 Summit in Pittsburgh last week after his meeting with the South African leadership.
“I hope Indian companies will not be subjected to any discriminatory treatment,” the Indian prime minister said in reference to the regulatory roadblocks, both in India and South Africa, which have emerged in way of the deal.