Bharti-MTN deal cut off … again

The ink was barely dry on the much-anticipated finalization of the US$24 billion Bharti-MTN merger when it was called off a second time. Bharti said in a statement that the South African government was not ready to “accept the deal in its current form,” but hoped the government would “review its position in future”.

Only a few weeks ago Indian and South African officials were working towards what seemed to be a done deal. India’s Bharti Airtel, a leading cellular provider, and South Africa’s MTN Group, Africa’s biggest mobile phone operator, had reportedly settled on an arrangement in which each would purchase a large stake in the other and subsequently merge to create the world’s third-largest wireless operator in terms of subscribers.

However, political tussles thwarted any such conclusion. The conflict between the parties is largely based on MTN’s desire for a dual listing, which is currently not permitted under Indian law. South African officials had been keen to create a structure which would allow the companies to maintain separate groups of shareholders, while still sharing cash flows and operations. The South African government insisted that India commit to making legal changes in order to guarantee that the two companies would eventually amalgamate.