The proposed tie-up between MTN and Bharti Airtel is being held up by legal problems in India, President Jacob Zuma said on Thursday.
Zuma did not clarify what the hitches are but Indian financial daily Economic Times reported this week that South Africa is pressing India for an agreement on dual listing of companies before the deadline.
The Indian government has said it was open to a dual listing on Indian and South African bourses.
The Bharti/MTN transaction, which would create the world’s third-largest mobile group by subscribers, is subject to an end-September deadline.
”I am told there are hitches in terms of the law, particularly on the Indian side because you are talking about companies that must come together,” Zuma told reporters in Cape Town.
One analyst said MTN and Bharti are likely to overcome any legal issues.
”India has stated it has no issues with the deal, but the only problem is with the dual listing. Both countries want ownership of their telecom assets to remain in their own countries,” said Sonam Udasi, vice-president of research at Brics Securities in Mumbai.
”But both the companies would know about these legal issues, and so are likely to work through them,” he said.
Support
The two companies have extended talks twice before, and a person with direct knowledge of the matter said on Monday it was possible the talks could be further extended by a few days.
Zuma said he was not taking part in the process but added that support for the transaction could come once all the facts are known.
”I think the support will come once one has all the facts and you know exactly what is happening, whether that takes in the South African economy and the companies further,” he said.
A spokesperson for Bharti said the company had no further comment beyond what it said in earlier statements. MTN was not immediately available for comment.
South Africa’s communications regulator Icasa said earlier this week it might not grant approval for the proposed tie-up.
Bharti and MTN were involved in similar talks last year but failed to reach an agreement.
Bharti has increased the cash component of its offer for a 49% stake in MTN to $10-billion from a proposed $7,6-billion, two people familiar with the matter said last week.
On top of that, Bharti would pay $4-billion in stock for a total package of $14-billion, 7% more than the earlier $13-billion proposed deal.
Shares in MTN were 1,85% higher at R129,40 compared to a 1,58% gain in the JSE blue-chip Top-40 index. Bharti Airtel shares closed 3,13% stronger at 433,15 rupees. – Reuters