What began as boardroom negotiations between two telecom giants?who for a second time after a year-long hiatus re-entered into negotiations on May 25?saw the grand finale being played out on the political field.
It was not the price, generally the determinant in cross-border mergers and acquisitions that marred the deal, but Pretoria?s demand for dual listing, which surfaced at the last moment to save the independent character of MTN.
As it all came down to the wire, even Bharti?s top management, who were at an off-site in Thailand, keenly awaited the outcome of a meeting of South Africa?s treasury department (the country?s finance ministry) in far away Johannesburg before they learnt that their months of hard work had come to nought.
The ball had passed into the court of the South African government as it holds a 21% stake in MTN through wholly-owned subsidiary Public Investment Corporation, which is the single-largest shareholder. Therefore, the South African government had a dual role: as regulator and shareholder.
That concluding a deal was going to prove more difficult that originally envisaged was evident when, following the demand for dual listing, a team of South African government officials visited India last week and held two-day meetings with their counterparts from Reserve Bank of India, Securities & Exchange Board of India and the finance ministry. It is the outcome of their briefing to their superiors in Johannesburg that sealed the Bharti-MTN deal?s fate.
Sources said Bharti CMD Sunil Mittal decided to throw in the towel when it became clear that South Africa was unwilling to budge from its demand for dual listing, despite Prime Minister Manmohan Singh backing the deal and finance minister Pranab Mukherjee promising to look into the issue.
In the end, Bharti?s global ambitions were thwarted not by its own gumption, but by the conservatism of South Africa?s treasury. In the process, what stood in stark relief was the coming of age of the Indian government, which acted as a facilitator rather than spoiler.
