MTN suitors are facing a major problem as US bankers have made it clear they cannot fund the acquisition/merger of the South African teleco until it spins off or demerges its businesses located in at least four countries.
The Financial Times reported that Ambani hopes to be a major shareholder in RCom and MTN after the firms combine in a reverse takeover. Ambani would pay an extra $4 to $5 billion in cash to bring his stake in MTN to his target level of 34.9 per cent, the ceiling beyond which he would be forced to make a general offer for MTN, the newspaper said in an article published in its online edition.
The Wall Street Journal quoting two people familiar with the situation said Bharti has contacted West Asian sovereign wealth funds for additional cash to back its MTN bid for a majority stake. Further, the paper quoted another person and said that Bharti has already negotiated about $12 billion in financing from a group of banks that includes Standard Chartered PLC, but the deal may require more resources.
The MTN Group, the largest mobile operator in sub-Saharan Africa, might seek a 'non-compete agreement' with Bharti Airtel, India's largest private telecom company, to bar it from entering the 21-odd markets in which the Johannesburg-listed company operates, banking sources said.
At a 20 per cent premium, the South African company is valued at $45-47 billion. The Indian GSM provider is looking to acquire a 51 per cent stake in MTN.
According to finance ministry officials, Bharti which is in exclusive talks with MTN till September 31, will also have to seek the approval from the Foreign Investment Promotion Board if the foreign direct investment limit (direct or indirect) crosses the 49 per cent limit.
A group of officials from the National Treasury and the South African Reserve Bank ) are in India to meet officials from the finance ministry, Reserve Bank and market regulator Securities and Exchange Board of India to discuss regulatory matters related to the deal.
In his first public appearance after talks were called off on September 30, Mittal, who is CMD of Bharti Airtel said, "No further talks with MTN and the current round is over."
According to a report by the research arm of Citigroup, although SingTel will have no direct involvement in the Bharti-MTN deal, its holdings in Bharti may reduce due to the increased size of the merged entity. '...SingTel has no direct deal involvement and that the current 30.5 per cent (effective) stake in Bharti dilutes to 19.4 per cent. SingTel likely becomes a smaller shareholder in a larger entity,' the Citigroup report said.
The movie, incidentally a court-room drama, had its lead actors asserting their Aitraaz to each other over issues like relationships, illicit affairs and other allegations and had the main protagonist, played by Akshay, as an employee of the South African mobile firm MTN when he meets the antagonist.
India's largest private telecom company Bharti Airtel is believed to have held discussions to rope in Singapore Telecommunications Ltd, which directly and indirectly holds 30.5 per cent in the company, to bid for South African telecom major MTN Group.
A deal between MTN and RCom could be announced this weekend despite threats of legal action to block the deal, the Wall Street Journal said in a report in its online edition on Thursday, quoting two unnamed people familiar with the situation. The report added that the two companies are "getting very close to announcing the deal. If there are no last-minute disagreements, the announcement may come as early as Sunday or sometime next week."
Partner of global consultancy firm Ernst and Young, Ashwin Parekh too opined against full convertibility and said it could 'lead to flight of capital'.
RCom, which, sources say had offered to pick up a 51 per cent stake in MTN through a complicated share-swap deal through which shareholders of the African company would pick up stake in RCom, had asked for an extension of the exclusivity talks for another three to four weeks.
Ambani siblings' war intensified on Saturday with the younger Anil's group warning to retaliate in case Mukesh-led Reliance Industries goes legal with its claim on the potential multi-billion dollar amalgamation deal that the former is pursuing with South African telecom giant MTN.
The market regulator, in a notification on Tuesday, said MTN would only need to make an open offer when the GDRs issued by Bharti for the takeover are converted into equity shares with voting rights. For now, Sebi has given an exemption, saying the proposed deal structure does not require an open offer since MTN's shareholding in Bharti will only be through GDRs.
An application by MTN to the Johannesburg Securities Exchange to suspend trading in its shares just 20 minutes before it put out a short statement which said Bharti and MTN had agreed mutually not to proceed with the transaction also surprised analysts.
Bharti Airtel, India's leading private telecom service provider, is keen to acquire a player similar in size to South African giant MTN in the emerging markets to become a global brand, said Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises.
Bharti Airtel, India's leading private telecom service provider, is keen to acquire a player similar in size to South African giant MTN in the emerging markets to become a global brand, said Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises.
Major MTN private-sector shareholders include investment management firms like Allan Gray, Polaris, Coronation and Stanlib. South African media reports have quoted Polaris' Anthony Sedgwick, co-manager of the Nedgroup Investments Rainmaker Fund that owns 6.3 million MTN shares, as saying he does not want the deal to go ahead.
A bench comprising Justices N K Sodhi and Samar Ray observed that the appeal was 'premature' and dismissed it as 'infructious'. Deepak Mehra, a shareholder of Bharti Airtel who holds around 100 shares aggregating to around Rs 40,000, sought to overturn an informal guidance issued by Sebi on June 22.
Banking sources said with the MTN shareholders asking for a higher price than what Bharti had initially offered, the Indian telecom company might now pay 50 per cent of the money in cash and the rest through shares in Bharti Airtel. The sources added that MTN is also believed not to favour signing an 'exclusivity' contract with Bharti Airtel under which it would be bound not to talk to any other competing bidder till the negotiations with them have been concluded.
The two also met corporate affairs minister Salman Khurshid, who asked them to keep his ministry in the loop.
Having secured funding commitment for the now-aborted $23 billion MTN deal, Bharti Airtel is likely to look for other opportunities in South Africa and Asian markets.
The deal, which will be the largest in the global telecom space, will be subject to South African government approval.
Anil Ambani group company Reliance Communications on Monday announced entering into an exclusive negotiations with South Africa's telecom giant MTN to discuss potential combination of their businesses.
A potential merger being discussed by Indian telecom major Bharti Airtel and South Africa's MTN could increase the net debt of the two firms by about $6.9 billion, global rating agency Fitch said.
Claiming that merger discussions with South African firm MTN are progressing 'satisfactorily', Bharti Airtel said on Thursday that the period for exclusive talks has been extended by yet another month till September 30. This is the second time this month that the period for exclusive talks has been extended.
Loop Telecom has been looking for a strategic investor for some time now and people close to the development said the telecom operator was willing to sell up to 45 per cent stake in the firm.
Telecom giant Bharti Airtel and South Africa's MTN on Monday said that no decision has been taken by their respective boards to acquire shares or implement the proposed merger between them as the period for exclusive talks has been extended till August 31.
In view of the foreign investment that would come into Bharti Airtel via the proposed share-swap and cash transaction arrangement, the finance ministry has asked DoT to ascertain more specific contents of the deal and advise the ministry on the same. In its letter, DEA has also said that the transaction would need to adhere to the sectoral cap as per the FDI policy as also specific telecom sector regulations.
A policy change on full convertibility of rupee is not possible at present, commerce and industry minister Anand Sharma said in New Delhi. Even finance minister Pranab Mukherjee said on Wednesday that 'we welcome the deal but it should in the context of existing laws of the land'.
Full convertibility is presently not allowed under Indian law and the government is in no hurry on that path.
Bharti Airtel today announced that its deadline for the $23 billion share-swap deal with MTN, the South African telecom firm, is being extended till September 30. It also, for the first time, stated that the discussions between the two were "progressing satisfactorily".
Nisbet would be succeeded by Nazir Patel effective from October 1. Nisbet has been part of the telecom company for 14 years.
The meeting was attended by Sebi executive director Usha Narayanan, Sebi wholetime member Prashant Saran and Reserve Bank chief general manager foreign exchange department Salim Gangadaran among others.
Finance Minister Pranab Mukherjee on Thursday described the failure of talks between India's telecom giant Bharti Airtel and South Africa's MTN on the $23 billion merger deal as "part of the game".
Bharti Airtel's share-swap deal with MTN may trigger the takeover code. Under this code, an open offer for 20 per cent of a company's shares has to be made in two circumstances -- either the promoters buy more than 5 per cent in the company within a year or another entity acquires 15 per cent. The reason it is triggered is that Bharti Telecom, Bharti Airtel's promoter company, would end up indirectly buying a little over 12 per cent in it via its investment in MTN.
Essar group, which is buying out the Uganda and Congo assets of Warid Telecom -- a joint venture between the Abu Dhabi Group and Singtel and is present in Kenya, has also reportedly been sounded out by Zain shareholders. A company spokesperson, however, declined to comment on the issue.
Bharti Airtel on Monday renewed talks for acquiring stake in South African telecom company MTN.
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