Finally, what could have been the largest telecom deal globally did not happen. Sunil Mittal-led Bharti Airtel on Saturday called off the negotiations to acquire controlling stakes in South African telecom major MTN at an estimated $45 billion.
Bharti said it pulled out of the talks because MTN deviated from the originally agreed terms and presented a completely different structure envisaging Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of the company held by the Bharti family and SingTel in exchange for a controlling stake in MTN.
?Bharti believes that this convoluted way of getting indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity,? the company said in a statement.
Discussion were on till late Friday night without a breakthrough, the company said.
Bharti said at the invitation of MTN board, it entered into exploratory discussions on the possibility of combining the two emerging market telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. An agreement in principle was reached on May 16 and a term-sheet was initialed between the two lead bankers on May 21. Bharti said it had confident letters of funding over $60 billion.
?The reference point at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point,? the company said.
The statement also said the company?s vision of transforming itself from a home-grown Indian company to a true multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to it.
Bharti said the company would continue to explore possibilities to expand its presence in the overseas market. The MTN deal would have had catapulted the largest Indian mobile operator to the fourth largest operator in the world from its present ranking as the tenth largest player. Bharti currently has about 65 million users while MTN has about 68 million spread over 21 countries of southern Africa and West Asia.
Had the deal materialised, it would also have put Bharti much ahead of its Indian competitors like Reliance Communications and Vodafone Essar.