Bharti, MTN call off merger talks

Merger talks between emerging markets giants Bharti and MTN have been called off once again, after the two firms failed to convince the South African government – MTN’s biggest shareholder – on the benefits of the deal.

In a statement released Wednesday, Indian operator Bharti Airtel said it has decided to disengage from discussions with the MTN group when the exclusivity period ended on September 30.

Talks between Bharti and MTN began in May and have been extended twice, only to end once again without resolution. An earlier round of talks between Bharti and MTN, in 2008, was unsuccessful, with Informa analyst Matthew Reed noting that a reported factor in that failure was South Africa’s worry that control of MTN, which is perceived as a national champion, could pass into foreign hands.

South Africa’s communications minister has more recently made comments about the proposed alliance that suggest that the South African government’s support for the deal is not certain. The South African government is MTN’s biggest shareholder, with a 21 per cent stake, through the Public Investment Corporation, a state pension fund.

The proposed transaction would have been the single largest foreign direct investment into South Africa and one of the largest outbound FDIs from India, but Bharti said the government of South Africa has expressed its inability to accept the merger in its current form.

“We hope the South African government will review its position in the future and allow both companies an opportunity to re-engage,” Bharti said.