BHARTI AIRTEL AND MTN

MAY 2008

BHART AIRTEL and MTN sat down to ink a deal .which would have created world 6 largest mobile company, with with a network of 130-million subscribers -- 68-million from MTN and 62-million from Bharti -- that would dominate two of the world's fastest-growing cellular markets, India and Africa.Bharti proposed buying MTN at R165-175 per share, which would have valued the Johannesburg listed company at $41bn-$44bn. It would have set a record for a cross border acquisition by an Indian company.

However, after intense negotiations, MTN began to worry that a takeover of one of South Africa's most successful post-apartheid companies would be politically unacceptable. It proposed that Bharti's main shareholders instead swap their stakes for stock in MTN. This would have made Bharti an MTN subsidiary - a proposal the Indian company said on Saturday would have "severely compromised" it. So the talk was not able to walk.

THE RCOM DRAMA

After the talks with bharti failed , Rcom come into the picture .It agreed to the subsidiary thing , but it has its own share of troubles due to brothers fight(ambanis). So , even that failed .If the deal had been done,then the combination of Reliance and MTN could put the merged entity into the top tier of telecoms groups, which include China Mobile, the world's largest mobile operator by market capitalisation, and Vodafone, the largest wireless company by revenue.

MITTAL'S PROBLEM ANIL'S COMFORT

The reliance and mtn preferred model was on a reverse take-over, under which Mr Ambani could swap most or all of his 66 per cent stake in Reliance for a stake in MTN of up to 34.9 per cent. Under Indian rules, MTN would also have to make a tender offer for a further 20 per cent of Reliance. That arrangement would be acceptable to Mr Ambani because he would end up by far the largest single shareholder in the enlarged group - the existing leading investors in the South African company would collectively hold only 23-24 per cent after the deal. Mr Mittal would not have enjoyed the same comfort for two reasons. First his family owns a 26 per cent stake in Bharti Airtel, according to analysts at JPMorgan, and would have ended up with a smaller stake in the enlarged group. He also would have had trouble with Indian rules restricting foreign ownership to 74 per cent of telecoms companies. Bharti is already 65 per cent foreign-owned compared with just 10 per cent of Reliance.

TALKS RENEWED IN CHANGED SCENARIO

Bharti is now the third largest single-market operator in the world, after China Mobile and China Unicom, while South Africa-headquartered MTN is one of the MEA region’s strongest players, with operations in 22 countries. Combined, the two carriers would rank third in the world in subscriber terms, behind China Mobile and Vodafone. The proposed deal would see Bharti acquire 49 per cent of MTN and MTN acquire 36 per cent of Bharti, of which 25 per cent would be held by MTN with the remainder held directly by MTN shareholders, Bharti said in a statement.

Still everything is hazy , will this time sunil mittal will be able to ink the deal is yet to be seen