Experts give thumbs-up to possible Bharti-MTN deal
Early on Tuesday morning, India’s leading telecom company Bharti Airtel announced it had renewed its effort for a significant partnership with MTN Group Limited and is exploring a potential transaction whereby, pursuant to a scheme of arrangement, Bharti would acquire a 49% shareholding in MTN and, in turn, MTN and its shareholders would acquire an approximate 36% economic interest in Bharti, of which 25% would be held by MTN with the remainder held directly by MTN shareholders. Bharti and MTN have agreed to discuss the potential transaction exclusively with one another until July 31, 2009.
Market experts said the deal, from whatever details were available, looked like a good one. Bhavesh Gandhi of India Infoline said Bharti was the first company from the top-three Indian telecom companies to first move to acquire a company abroad. “However, concerns on the topline and return on capital both would weigh on the share price because of the acquiring scale — Bharti has a lot of scale with almost 100 million subscribers,” he said. “Also, MTN has operations in Sudan and Iran so how the legal framework comes up remains to be seen.”