Professional Documents
Culture Documents
AND
MTN - THE
UNSUCCESSFUL
DEAL
Indian Telecom Sector
50 43
40
Revenues (USD billion)
30
20
20 15
9 10 11
10
0
2002-032003-042004-052 005-062006-07 … .. …. 2009-10
Group Company wise % market share - Aug'2009
•
•
MTN OPERATES IN THESE COUNTRIES
TALKS BEGAN IN MAY 2008
WITH….
• MTN asked for $50 billion, Bharti was willing to go up to
$45 billion
•
• Bharti had arranged funds through debt for buying about 51 percent
• 100% stake was not possible as the net profit of MTN stands at $1.4 billion,
which would not have been enough to service the debt that is required to
complete the deal.
• As per Broad-Based Black Economic Empowerment regulations, 20 percent
of the ownership of a company operating in South Africa needs to be
with the black people.
• But, for this the merged company needs to get itself listed in the South
African stock market which was a long and complex process
• Crossing the limit of FDI was also a concern for Bharti Airtel
•
THESE CONTRADICTIONS
CALLED OFF THE MUCH
HYPED DEAL BETWEEN
THE TWO TELECOM
GIANTS
If the deal was through it....
•
Bharti, MTN Re-Engage in
Merger Talks On May26,2009
• As per the proposed structure, Bharti would have
acquired 49% shareholding in MTN
• In turn MTN and its shareholders would acquire about
36% economic interest in Bharti.
• As per the provisions of the Takeover Code of SEBI
Bharti cannot acquire any voting rights through the
GDR/ADR route
• The South African government demanded dual listing of
MTN in order to protect the character of MTN as
South African entity
• India Denied MTN for dual listing
• The deal was again called off
• If we go by the sources the deal fell through because of
South Africa's political compulsions
Why India said no to dual
listing??
• In India dual listing is not permitted under SEMA and the
Company law
• Would have affected India’s foreign direct investment
policy
• Would have led to huge tax losses to the government
• Would have weakened the oversight of market regulator
SEBI as it would not be able to monitor overseas
stock exchanges
• Structure would have led to an export of capital market
• It also had risks of multi-currency settlement
infrastructure
Concept of Parallel listing