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Mr Sunil Mittal

Our Bureau

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New Delhi, May 24 Mr Sunil Mittal will have to wait longer to realise his dream of making Airtel a global telecom company.

After almost a month of hard negotiations, the Indian telecom major on Saturday said it had unsuccessfully ended talks for a possible merger with South African company MTN due to disagreement over the holding structure.

Bharti said the structure proposed by MTN would not capture the synergies of the two companies and was a convoluted way of getting an indirect control of the combined entity, compromising the interest of the minority shareholders of Airtel.

Bharti’s vision of transforming itself from a home-grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti.

Discussions were on till late last night without a breakthrough. “Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN,” said a Bharti spokesperson. The company said it had got funding of over $60 billion from various global banks for the proposed merger.

Bharti said MTN had changed the structure of the proposed merger after an in-principle agreement was reached on May 16. At the invitation of the MTN board, Bharti entered into discussions on the possibility of combining the two telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. After an in-principle agreement was reached, a term sheet was discussed between the two lead bankers. This agreed term sheet was presented to the MTN board on May 21.

“MTN has now presented a completely different structure from what was agreed. This new structure envisages Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN.

“Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the interest of the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity,” a spokesperson said in a statement. If the merger talks had gone through, the combined entity would have become the sixth-largest mobile operator in the world. Bharti ruled out the possibility of re-entering talks with MTN.

“The reference price at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion. This is in line with Bharti’s highly disciplined approach towards any acquisition and consistent with Bharti’s philosophy that it will not engage in a bidding war at any stage,” the statement said.

However, Mr Mittal’s dream to go global is intact. “Bharti remains keen to expand in the international arena and will continue to look at opportunities that are consistent with its vision to be a true Indian company that plays a significant role in transforming global telecommunications,” the spokesperson said.

More Stories on : Telecommunications | Mergers & Acquisitions | Overseas Investments | Corporate Disputes | Bharti Tele-Ventures Ltd

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Bharti drops talks with MTN

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