New Delhi: With only seven days now left for Bharti’s exclusive talks with South African telecom giant MTN to come to an end, the finance ministry on Wednesday said the domestic firm may have to seek FIPB approval for the deal as the transaction involves swapping of shares.
According to finance ministry officials, Bharti, which is in exclusive talks with MTN till 30 September, will also have to seek the approval from the Foreign Investment Promotion Board (FIPB) if the foreign direct investment (FDI) limit (direct or indirect) crosses the 49% limit.
For the telecom sector, the FDI ceiling is 74%. However, all proposals wherein the FDI above 49% has to come via FIPB.
If it comes to FIPB, then it (FIPB) will take a call on it within 30 days, they said but added that the companies are yet to approach the finance ministry for approval.
As on 30 June 2009, the total foreign shareholding in Bharti Airtel is a little over 42%.
“The proposed deal has not come to either the capital markets division of the finance ministry for dual listing or in the FIPB so far,” they said.
According to original terms of the transaction, Bharti will acquire 49% in MTN and the South African firm will acquire 36% economic interest in Bharti.
Reports say Bharti has sweetened its offer for the 49% stake in MTN by $900 million to $14 billion in cash and stock, and has agreed to retain MTN’s senior management for at least two years.