The South African government backs a proposed tie-up between MTN Group and India’s Bharti Airtel that could lead to the creation of the world’s number three mobile firm.
The two companies have been working to conclude a $23-billion cross-ownership deal since May 25. They extended talks for a second time to September 30 after previously extending them by a month to August 31.
The government in principle supported the proposed transaction, said Tiyani Rikhotso, a spokesperson for the Communications Department.
”It appears to be a good proposal especially given it [is] … within the framework of South-South cooperation,” he said.
”If all the prerequisites of mergers and acquisitions [rules] … are met, I don’t see any reason why anybody will want to stand in the way of what will benefit the people of the two countries.”
Under the proposal, an initial cash-and-shares tie-up would see MTN take a 36% stake in Bharti and Bharti 49% of MTN, with the possibility of a full-blown merger to follow.
The transaction has been delayed by differences over valuations and management rights, with Bharti under pressure to sweeten its part of the deal.
A combined MTN/Bharti would be the third-biggest mobile operator based on subscribers, behind China Mobile and Vodafone, although its annual sales of $20-billion would be dwarfed by China Mobile’s $60-billion and Vodafone’s $65-billion. — Reuters