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India’s top mobile company Bharti Airtel said on Wednesday it and
SA cellular flagship MTN Group had decided to end tie-up
talks aimed at creating an emerging-market cellphone powerhouse.
“Bharti and MTN have decided to disengage from their discussions when the exclusivity period ends on 30 September 2009,” Bharti said in a statement.
“This structure needed an approval from the government of SA, which has expressed its inability to accept it in the current form. In view of this, both companies have taken the decision to disengage from discussion,” Bharti said in a statement.
It’s understood that government had wanted MTN to continue to be listed on the JSE, but Indian law prohibits dual-listed entities.
In a statement issued to the JSE’s Sens news service after the market closed, MTN said it and Bharti had not been able to conclude a transaction within the “economic, legal and regulatory framework within which both companies operate. Accordingly, MTN and Bharti have mutually decided to terminate further discussions regarding the potential transaction.
“The MTN board would like to thank all parties involved in these lengthy negotiations for the positive and constructive manner in which the negotiations were conducted. In particular, MTN expresses its appreciation to the SA and Indian governments for their co-operation and supportive approach.
Trading in MTN shares was suspended late on Wednesday. Normal trading will resume on Thursday.
The rand weakened substantially on news the proposed deal, which did not enjoy the support of a number of MTN’s large, institutional shareholders, had been called off. The SA currency was last trading at R7,60/US$, down 2,3%. — Sapa, TechCentral
As much as I would like to blame the South African government for this deal breaking down, I think the restrictions imposed by Indian law are more to blame.
MTN shareholders were already muttering about the deal. Even if the SA government had not intervened there is a strong chance the shareholders would have blocked it. And if the deal meant MTN would have to leave the JSE then that chance would probably have become a certainty.
I wonder if they discussed the possibility of Bharti listing only on the JSE? That would have been an interesting way to bypass the legal restrictions. But Bharti shareholders would probably have rejected that for the same reason?