The MTN -Bharti talks are in now in the final round with media reports saying the Indian government is waiting for their South African counterparts to bring a new offer that comply with Indian laws.
Today is the deadline set by both parties for their exclusive negotiations.
The Economic Times said the Indian finance ministry is likely to accommodate the deal if it is not in direct violation of India’s policy on dual-listed companies, which in its current avatar may need changes in the capital account convertibility regime.
“We are hopeful the deal will go through, but don’t have a real idea of the conditions the SA government may impose in the new deal structure. They have indicated a decision on September30,” a source close the Bharti Group said.
From available indications, a decision on the deal is likely on Wednesday. But SA government officials are keeping the Bharti top brass guessing on what the last-minute changes in the deal structure are likely to be. “I can’t say anything at this point. We are all waiting for the final word from Johannesburg,” Sunil Mittal told Economic Times outside the Bharti office on Tuesday evening.
It is widely believed that the South African government is looking at an executive order to accommodate the deal structure. “We are awaiting the final deal structure after which we will explore ways to fit it in with the policy regime here,” an Indian finance ministry official said. “The visiting delegation discussed a structure where Bharti would be listed in India and MTN in South Africa and the possibility of a common holding trust,” the official added.
The official word from the Indian government has also kept hopes alive for Sunil Mittal’s audacious cross-border merger that’s likely to create a $23-billion giant with operations in 24 countries. Finance Minister Pranab Mukherjee said that he and the Prime Minister had a “positive approach” on the deal and that the government was working on it.
Under the proposed scheme of arrangement announced in May, MTN will hold a 36% stake in Bharti Airtel through Global Depository Receipts to be listed in Johannesburg.
The South African government has also sought dual listing of the companies which is not favoured by RBI, as it would require the full convertibility of rupee. Under dual listing, where the shares are listed on different exchanges (Indian/Johannesburg) it allows investors an option where they want to trade besides it provides liquidity.
South Africa wants Bharti to be allowed dual listing in Johannesburg so that its shares, and not depository receipts, can be traded in South Africa. The problem here is that dual listing is linked to the full convertibility of the rupee which is not allowed in India. The Indian rupee is partially convertible with entities free to exchange it to pay for trade in goods and services
By ITnewsAfrica Reporter
