Mumbai: The South African government’s majority ownership of MTN Group Ltd was a factor that could have scuttled the proposed $23 billion (around Rs1.07 trillion) merger of the telecom firm with Bharti Airtel Ltd, the country’s envoy to India said in an interview.
“One of the over-riding concerns was that the South African government has a huge stake in MTN,” high commissioner Francis Moloi said. “So obviously when you enter into a merger with a private company from across the borders, a public interest issue is at stake. You have a situation where a public asset could be transferred into private hands across the border.”
On 30 September, Bharti ended talks with MTN, saying the merger structure pursued by the two companies had failed to get the approval of the South African government.
The failed talks marked the second attempt by the two companies to reach a merger deal that would have created the world’s third largest mobile phone firm by subscribers. A combined entity would have had 200 million subscribers and $20 billion of revenue.
Representatives of the South African government have been indicating that the possibility of a change in MTN’s national character was a serious concern with the government there.
South Africa’s minister for communications had said on 30 September, the day the extended deadline for exclusive talks between Bharti and MTN expired, that MTN should remain a South African company.
However, Moloi indicated that South Africa seeks cross-border investment from countries such as India and the government there was undertaking a review of its legal and regulatory framework to enable better access to South African investments.
“There is still commitment on the South African government side to ensure that we can find the ways in which we can bring such deals to fruition,” said Moloi on the sides of the Global M&A (merger and acquisition) Network summit in Mumbai.