MTN, Bharti part ways

Johannesburg, 26 May 2008

A potential merger of SA-based MTN and India-based Bharti Airtel has been called off, following a difference of opinion.

On Saturday, Bharti pre-empted MTN by releasing a statement saying it had decided to "disengage from ongoing talks". This followed discussions on Friday which lasted late into the night, "without a breakthrough".

MTN will only be able to make a statement this morning when the Stock Exchange News Service goes live at 7am.

In its statement, Bharti reveals MTN proposed a merger of the companies rather than a buyout or majority share purchase.

"A number of structures were discussed and evaluated between the lead bankers on both sides. An in-principle agreement was reached on 16 May and a term sheet was initialled between the two lead bankers. This agreed term sheet was presented to the MTN board on Wednesday, 21 May," it said.

However, MTN baulked at the agreed deal and proposed a "completely different structure".

Bharti explained: "This new structure envisages Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN. Bharti believes this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity."

Additionally, "and more importantly", this proposal would have "severely compromised" Bharti`s vision of transforming itself from a home-grown Indian company to a true Indian multinational telecom giant, "symbolising the pride of India".

"This was completely unacceptable to Bharti," the company said.

Despite the dispute, Bharti says the discussions were conducted cordially and has wished MTN "the very best".