MTN not wooing Bharti

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 28 Jul 2008

MTN has killed speculation by the Indian media that it is making a second pass at Indian-based telecommunications operator Bharti Airtel.

The speculation follows a series of failed bids by the MTN Group in India - initially with Bharti and a second set with Reliance Communications. "The MTN Group can confirm that it is currently not engaged in any discussions with Bharti Airtel," says MTN spokesman Nozipho January-Bardill.

Initial discussions with Bharti began in May this year, when Bharti proposed a buyout or merger of the companies. However, MTN baulked at the deal and proposed a different structure.

In a statement at the time, Bharti explained: "This new structure envisages Bharti Airtel becoming a subsidiary of MTN and (the) exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN."

Bharti was unhappy with the proposed deal and decided to pull out. MTN's statement confirmed it had not been able to reach "agreement on a suitable transaction structure" with Bharti.

Minutes after the announcement, at the end of May, explaining the failed Bharti talks, MTN released a second statement saying it had entered into exclusive 45-day discussions with Reliance, which was subsequently extended by two weeks.

A raging blood feud between Reliance Communication's shareholders, brothers Anil and Mukesh Ambani, prevented the possible share swap deal. Analysts said the deal could have created a top-10 global telecoms firm.

Despite its lack of success in India, the MTN Group has said it is still interested in pursuing growth in emerging markets. While the company has not been specific about its emerging market plans, January-Bardill said it will still fish for other opportunities.

She said the European emerging markets are not really an option since those are saturated, which leaves markets in Africa, the Middle East and possibly South America.

Frost & Sullivan ICT industry analyst Lindsey Mc Donald says she expects that Latin America could be the next big area of interest for MTN. "Its market characteristics are similar to those of Africa, the mobile market has demonstrated robust growth and there are operators present there that could be good targets or partners going forward. America Movil is one possibility."

She says the company has shown it is very protective of its brand and corporate culture, and retaining these will continue to be non-negotiable in any negotiations.