New Delhi: Bharti Airtel may sweeten its offer for effective control of South Africa’s MTN, bankers said on Thursday, though changes to an outlined deal are unlikely to be big or soon.
Under a cash and share deal, which Bharti values at over $23 billon, India’s leading mobile operator would take 49% of MTN, while the South African firm would get 36% of Bharti.
A banking source briefed on the deal said the terms laid out so far were tentative and may change as talks progress.
“These are the broad outlines. Things can change closer to a final agreement. At this juncture, I don’t see any need to sweeten it,” said the banker, who did not want to be named as he is not authorised to speak to the media.
“Let’s wait for the big (MTN) shareholders to come through, then Bharti can think of any change, if at all,” said another banking source in India, who also didn’t want his or his firm’s name to be mentioned given the sensitivity of the issue.
A Bharti Airtel spokesman declined comment when asked if there was any possibility of the company sweetening the deal, which would create the world’s third-biggest mobile firm by subscribers after China Mobile and Vodafone.
Four of MTN’s top 25 shareholders have said they would reject the plan as outlined, and other big investors are still unsure.
MTN’s biggest shareholder, South African state-owned pension fund Public Investment Corporation (PIC), told Reuters in an emailed statement it was still analysing the proposal.
Sanjay Chawla, telecoms analyst at Mumbai brokerage Anand Rathi Securities, estimated Bharti would pay 160 rand per MTN share, a one-third premium to MTN’s Wednesday close.
“Bharti has not said it is the maximum price they are paying ... to appease a certain section of investors they might go for it,” Chawla said.
Under the present terms, Bharti would make a net payment of about $4 billion, which banking sources have said would be funded through debt. It would also issue new shares.
While MTN shareholders may argue for better terms, Bharti investors are unlikely to press for a sweetened deal.
“That would mean more equity dilution and more debt on the books, and that will not be liked by Bharti shareholders,” said Harit Shah, analyst at Angel Broking in Mumbai.
Bharti shares rose 3.4% on Thursday, recouping some of the 10.4% drop earlier this week. The broader Mumbai market ended up 1.3%.