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Two European bids in MTN fray

May 21, 2008 09:11 IST

The race for South African telecom major MTN Group is hotting up with the possibility of two other players evaluating a bid or a strategic relationship with the company. Banking sources say European telecom major Deutsche Telekom and Russian telco Vimpel Communications are also studying the possibility of talking to the MTN Group.

This development comes some weeks after Bharti Airtel had announced that it is in "exploratory talks" with MTN Group, which is aimed at "combining the strengths of the two leading emerging market players and is accordingly veering towards structures to achieve the objectives".

Meanwhile, a Bharti Airtel top executive team, which could include Sunil Mittal, is expected to go to Johannesburg for a second round of talks on the deal. However, a Bharti Airtel spokesperson declined to comment on the issue.

A Deutsche Telekom spokeswoman also declined to comment and an e-mail sent to Vimpel Communications went unanswered.

The move is significant after MTN Chief Executive Phuthuma Nhleko told Germany's WirtschaftsWoche, a business magazine, that other companies could enter the fray.

"European telecom companies have a general interest in Africa, so I cannot rule out that in future well-known telecom companies could express interest," he was quoted as saying on the magazine's website.

Nhleko added: "We are a public company and there is always the possibility of a takeover bid,without the involvement of senior management".

When asked about the MTN's expansion plans, Nhelko said the management was open to opportunities in Asia, where there would be more mergers.

Bankers said the move to open talks with other possible contenders might just be a leverage being used so that the Indian company makes a more definitive agreement on the structuring of the deal with MTN.

Earlier, UAE telecom giant Etisalat had publicly stated that they were looking at making a bid for MTN Group.

Deutsche Telekom has over 106 million mobile customers and operates in Germany, the US, the UK, Austria and the Netherlands, amongst others. It has a market capitalisation of $74 billion.

With over 50 million customers, Vimpel Communications has a market capitalisation of $42.5 billion, which is similar to MTN. The company operates in various markets in Russia and the CIS countries, which include Kazakhstan, Ukraine, Georgia, and Armenia, amongst others, under the "Beeline" brand name.

BS Reporters in New Delhi/Mumbai