Bharti, MTN framework agreement by weekend likely
26 Aug 2009
Bharti and MTN are likely to sign a framework agreement by the end of this week, following the Bharti and MTN chiefs' meeting with finance minister Pranab Mukherji.
The deal present a complex structure in which both firms would pay cash and equity for stakes in each other as per which Bharti will get 49 per cent in MTN, and in turn MTN will get 36 per cent economic interest in Bharti.
Bharti Airtel chairman Sunil Mittal and South Africa's MTN group president and CEO Phuthuma Nhleko had met finance minister Pranab Mukherjee on Monday to apprise him of the $23-billion mega deal, which will create the world's third-largest telecom operator by subscribers (about 200 million).
Although no official comment was available on the agenda of the meeting, sources said they may have centred on the revised foreign direct investment (FDI) norms formulated by the ministry, accommodating more FDI within the 74 per cent cap.
Bharti and MTN, the largest telecommunication companies in India and Africa, respectively, have been engaged in exclusive talks since June 24 to create the world's third-largest communications firm.
The potential merger highlights the attractiveness of fast-growing telecoms markets in India and Africa and reinforces India Inc.'s global ambitions undeterred by the worldwide economic slowdown (See: Bharti-MTN: India's largest cross-border corporate merger).