MTN-Bharti deal has collapsed with the Indian firm citing South African government as the stumbling block to the exclusive merger discussions. This is the second time the talks have deadlocked.
Media reports from India fingered the South African government’s disapproval of the deal structure in the current form as the reason of the collapse.
In a statement released by Bharti this afternoon the firm said it will purse other opportunities.
“This structure needed an approval from the government of South Africa, which has expressed its inability to accept it in the current form. In view of this, both companies have taken the decision to disengage from discussion,” the statement read
Earlier today the South African Communications Minister, Siphiwe Nyanda told the media they would prefer MTN remain South African firm with local management in control.
“We would love to see MTN remain a South African company, its management must remain South African, he said
The minister also tried to distance government as factor to the outcome of the talks saying, “We are waiting for results of the discussions between MTN and Bharti. Any possible delays with the deal would not be because of the South African government.”
MTN has also confirmed the talks have ended, in brief statement released this afternoon the company said, “Accordingly, MTN and Bharti have mutually decided to terminate further discussions regarding the potential transaction.”
“The MTN Board would like to thank all parties involved in these lengthy negotiations for the positive and constructive manner in which the negotiations were conducted. In particular, MTN expresses its appreciation to the South Africa and the Indian governments for their co-operation and supportive approach,” it added.
Under the proposed scheme of arrangement announced in May, MTN was to hold a 36% stake in Bharti Airtel through Global Depository Receipts and 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 Staff Writer
