The deal between Bharti Airtel and South African telco MTN is likely to be inked only by September this year. It is learnt that the two companies could extend the exclusivity period for discussion by a few weeks. The original timeline for discussions expires on July 31. In the event of the deal going through, the Bharti-MTN combined entity will be the third-largest wireless group globally.
“While there is no timeline for signing the deal, it is clear that the original date of July 31 has to be extended. The due diligence is still on and any deal is expected to be close not before mid-September,” a person directly involved with the transaction told ET. “Once, the due diligence is completed, it will take at least two-three weeks before the deal is inked,” the person said. It is gathered that Bharti will not revise its offer for the South African telco.
The proposed transaction between the two telecom players, who together have a user base of over 200 million, outlines Bharti owning 49% in MTN and MTN and its shareholders holding an effective 36% economic interest in Bharti. Under the proposed scheme of arrangement, MTN shareholders will receive ZAR 86 in cash and 0.5 Bharti shares for every MTN share they own.
However, some shareholders in MTN had earlier said the offer must be raised even though the original offer is being backed by the Mikati family, the second-largest shareholder in MTN. Pension fund Public Investment Corporation (PIC) is the biggest shareholder of MTN. “Both the sides are keen on closing the deal. If there is a need for Bharti to revise the price, it can be done at a later stage,” said the person quoted earlier.
In response to an email, a Bharti spokesperson said: “Beyond what we have already communicated in our previous press note, we have no further comment to offer at the moment.”
In South Africa, the deal would require approval from the country’s telecom regulator — Independent Communications Authority of South Africa (ICASA) — as well as the Competition Tribunal of SA. MTN has operations in 21 countries across the Middle East and Africa. “Taxation and other regulatory approvals have not come from some countries,” said another person familiar with the development.
In India, the two sides will need a go-ahead from the department of telecom (DoT) as well as the Foreign Investment Promotion Board (FIPB). If the deal goes through, it will create an emerging market giant with footprint in 23 countries and revenues of over $20 billion.
Standard Chartered is advising Bharti on the deal and is learnt to have underwritten a $4 billion bridge loan to finance the deal. Meanwhile, Singapore Telecommunications (SingTel), which has around 30% stake in Bharti, is readying funds to buy shares from those MTN stakeholders, who do not want to own a stake in Bharti post the merger.
Bharti and MTN first initiated talks on a potential combination of businesses in May last year. However, the talks fell through. The two companies initiated discussions exactly a year later.
Source: Economic Times