Bharti Airtel &

MTN Deal
Airtel
Headquartered at New Delhi, India

Operations in 20 countries

Worlds fourth largest telecom player by subscribers

Airtel is credited for pioneering all its business
operations except Marketing, Finance & Sales

Headed by Sunil Bharti Mittal
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Airtel
Strenghts:
Largest Telecom player in
India
Market Leader in India
Pan India Presence &
globally recognised brand
Strong Financials
Focus on core activities &
rest outsourced
Strong Brand Image
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MTN
Founded in 1994, MTN operates in 21 countries

Bulk of its subscribers are in South Africa, Nigeria,
Ghana, Syria, Cameroon, and Uganda

Africas largest mobile phone operator by subscribers
in Africa

Controlled by the Lebanon based Mikati family and a
Trust representing senior management and
employees.



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MTN
Strenghts:
Largest telecom player in
South Africa
Strong Financials
Financial performance &
continued investments
Strong Brand Image
Focus on R & D and
innovations to create new
services and
technologies

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Airtel-MTN Deal
The company were in talks for the deal in 2008, but
was called off due to last minute demand from MTN
that Airtel become its subsidiary
The deal resumed in 2009, and both the company
were close again for a merger deal for approximately
23 billion
Had this deal taken place, the merged company would
have been 3
rd
largest mobile operator in the world

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Numbers of the Deal
Mutual acquisition through a scheme of arrangement
MTN was to acquire 25% stake in Bharti.
MTN would give consideration of $ 2.9 bn in cash & newly
issued MTN shares to the tune of 25% of existing MTN
Share Capital
Bharti would have acquired 36% of existing Share Capital
of MTN from shareholders
Bharti would give consideration of ZAR 86 in cash & 0.5
newly issued Bharti shares in GDR for every share
acquired, which will effectively take Bhartis share to 49% in
MTN.
Each GDR would be equivalent to 1 Bharti share
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Synergies from the Deal
Full Cost Savings

Technology Sharing

Combined Financial Muscle for expansion

Technological Innovation

Low cost model of Airtel

Extensive 3G profile of MTN


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The Failure of the Deal
The deal couldnt go through because of Structural
Issues stated by South African Government
The deal was primarily affected by 3 factors:

Dual Listing of Combined Entity

FDI Regime in India

Indian Takeover Code

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Dual Listing
Dual listing at Johannesburg and Mumbai
In a dual listed company, two companies continue to
exist, risk and reward is stated in Equalization
Contract
Dual listing is not allowed under Indian Laws but
allowed under South African Laws
Independent Communications Authority of South Africa
(ICASA) asserted the deal would require their approval
& may face public hearing
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FDI Regime
Major hurdle to the deal

Radical changes were made in 2009 to FDI norms

Overall reading of the guidelines made the deal further
complex
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Indian Takeover Code
Last hurdle was SEBIs takeover code & its
amendment

Open offer be made even if ADR/GDR with voting
rights cross the prescribed threshold

Amendment required MTN to pay $606 billion to
acquire additional 20% stake

Lead to dilution of stake to Bharati & cash outflow for
MTN
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The Aftermath
The deal was called off on 30
th
September 2009

Bharati Airtel acquired 70% stake in Warid Telecom of
Bangladesh

Bharati Airtel also acquired Zain Telecoms Africa
assets

MTN reopened its merger negotiations with Reliance
Telecom
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