Bharti shares rise as MTN talks deadline looms

Bharti shares rise as MTN talks deadline looms

New Delhi: Shares of Bharti Airtel rose nearly 2% in morning trade on Tuesday ahead of an expected announcement by the top Indian mobile firm and South Africa’s flagship group MTN on a possible tie-up.

Shares of Bharti Airtel were up 1.75% or Rs7.25 at Rs421.60, a day ahead of the deadline to conclude negotiations on creating an emerging market telecommunications powerhouse.

New Delhi-based Bharti said a statement was expected later in the day on the outcome of the talks that have been going on since May between MTN, Africa’s largest cellular group, and Bharti.

“We should have an announcement later in the day," a Bharti official said.

The deadline for the discussions, which have already been extended twice since talks began in May, expires on Wednesday.

Analysts say the two sides may come out with an agreement paving the way for a complex cash and share swap that was first announced in May and would give both companies a minority stake in each other.

But the second “broader objective" of the proposed deal - a full merger of the groups - could take much longer, analysts say, especially because of South African worries about preserving the national identity of MTN.

The estimated $24 billion alliance is aimed at creating a group with annual revenues of over $20 billion and over 200 million customers.

The South African government, which indirectly holds over 21% in MTN, said earlier this month it was unwilling to sacrifice the company’s “South African character" and raised the idea of dual listing as a compromise.

But allowing dual-listed companies would involve major changes in India’s foreign exchange and stock market laws - something the government says cannot be done immediately and not to facilitate one corporate deal.

Indian Premier Manmohan Singh met South African President Jacob Zuma on the sidelines of the G-20 summit of rich and emerging nations late last week in Pittsburgh to say he supported the deal.

He said he told Zuma he “sincerely hoped this deal would go through."

“It has been agreed this matter can be further discussed with the government of South Africa," he added.

Still, analysts say even if a deal is reached, MTN shareholders may not be happy over the price. An agreement would need approval from 75% of MTN’s shareholders - some of whom have said the offer is too low.