Bharti Airtelis looking to buy assets in emerging markets - the latest sign that India 's biggest mobile phone operator could broaden its base.
The Financial Times reported on Friday that Bharti was considering a bid for MTN, a Johannesburg-based telecoms group with operations across Africa and the Middle East. MTN, valued at $34.8bn and likely to attract counter-offers in the event of a bid, is one of the prizes of emerging markets telecoms.
"We're always open to opportunities across the globe," Manoj Kohli, chief executive of Bharti Airtel, told Bloomberg Television. "We're looking at emerging markets. Of course, the valuations should also suit us." MTN's share price was trading slightly higher on Monday at Rand 141.32, up less than 1 per cent.
At this early stage of discussions there was no guarantee of a bid, said people close to the situation. Bharti was assessing how to finance an acquisition of this size in difficult capital markets and was looking at two structures that would enable it to limit the strain on its balance sheet.
One would see Bharti, which has a market value of $44bn, make a partial tender offer for a 51 per cent stake in MTN. This would allow MTN to retain its listing in Johannesburg and reduce the debt Bharti would need to take on to finance a deal.
A second structure would see Bharti bid for all of MTN, offering shareholders cash and shares. This would require Bharti to establish a secondary listing on the Johannesburg Stock Exchange. Both options envisaged an "integrated management structure" and dual headquarters in India and South Africa, the people said.
Merrill Lynch and Deutsche Bank are advising MTN, and Standard Chartered is advising Bharti. Singtel of Singapore, which owns 30.5 per cent of Bharti and supports the search for non-organic growth opportunities, including the possible combination with MTN, is being advised by Goldman Sachs. Phuthuma Nhleko, MTN's chief executive, and Cyril Ramaphosa, chairman, have been consulted on structures that might work but have yet to hold formal board discussions about a tie-up. One person close to MTN said the board might discuss whether the deal is "doable" on May 5.
Sunil Bharti Mittal, Bharti's chairman and managing director, has played down expectations of a bid, saying on Friday that, while the mobile operator had "talks with people all the time", there was "nothing on the table as of now regarding MTN".
