Bharti-MTN deal may face SA regulatory hurdles
15 September 2009
The proposed tie-up between South African mobile phone group MTN and India's largest mobile service operator Bharti Airtel needs approval from the South African cabinet before it can go through, Treasury director-general Lesetja Kganyago told journalists in Johannesburg on Monday.
The statement came as a team from the Indian firm was on the ground in South Africa meeting stakeholders, according to a Reuters report. Indications are that the talks could again stretch past the latest deadline of 30 September. The deadline has been extended twice before for the complicated merger talks that could create the world's third biggest mobile operator.
"As far as we are concerned we would like to promote south-south relations. The relationship between South Africa and India is a very important relationship. But the decision will be taken by the executive ... a transaction of this magnitude is not a decision you just take on your own," Kganyago said.
South African authorities have made clear in recent days that the transaction faces close scrutiny. Earlier yesterday, the country's communication regulator said the deal may face public hearings.
MTN, South Africa's second-biggest mobile operator and the only one still owned by South Africans, was set up with government help in 1994 as the country's first black-owned group.
Dual listing demanded
Meanwhile, The Economic Times reports that the $23-billion deal to create a transcontinental mobile behemoth has hit another hurdle as the South African government has sought dual listing for MTN that would allow actual MTN shares - not global depository receipts - to be traded on Indian and South African bourses simultaneously with equal voting rights.
The paper quoted two unnamed officials in the finance ministry as saying the South African government has asked the government of India to enter into an agreement before the 30 September deadline that would allow dual listing of MTN.
Since dual listing needs major changes in the Indian legal system such as changes in the listing norms and allowing capital account convertibility, and also changes under FEMA Act, it seems to be difficult implement, a government official told the paper.