Shares in India’s top cellphone company Bharti Airtel jumped on Thursday, a day after it announced merger talks with MTN aimed at creating an emerging market giant had been called off.
Bharti shares were up 5,01% at 439,50 rupees in early afternoon after Bharti said talks were over with cellphone operator MTN at the same time as expressing hope that discussions might be revived.
”There is a window open, they [the talks] may start up again,” said Harit Shah, telecoms analyst at India’s Angel Broking.
The New Delhi-based company’s shares had lagged the overall market amid investor worries about the effect of the estimated $24-billion deal on Bharti’s balance sheet.
But analysts said the deal could be revived despite running aground over worries by the South African government, which indirectly holds 21% of MTN, about preservation of MTN’s ”national character”.
MTN is seen as a South African corporate crown jewel.
Bharti, which has large global ambitions, said in a statement late on Wednesday, that it hoped the SA government would ”review its position in the future and allow both companies an opportunity to re-engage”.
The collapse of the deal made front-page headlines in Indian newspapers.
”The deal is dead — long live the dream,” said the Economic Times, in a banner headline reference to hopes the talks could be revived.
The collapse of the politically sensitive talks marked the second time the two companies had failed to forge an alliance.
In May 2008, they called off similar discussions to create a cellular giant with $20-billion in annual sales and over 200-million subscribers from India, the Middle East and Africa.
Bharti blamed the SA government’s rejection of the deal structure for the talks’ collapse, while MTN ascribed the failure to the ”economic, legal and regulatory framework” in which both companies function.
Meanwhile, the SA Treasury on Wednesday played down its role in the tanked merger talks.
”The Ministry of Finance did not have to approve the merger as both companies agreed to terminate it,” South African Treasury spokesperson Lindani Mbunyuza was quoted as saying by Agence France-Presse.
In a statement, the Treasury said MTN had informed Finance Minister Pravin Gordhan on Wednesday that the companies had ”mutually decided to terminate further discussions”.
They were not able ”to conclude all outstanding matters to enable the transaction to proceed”.
While the South African government said merger talks should be left to companies, relationships outside the current foreign exchange regulations required the approval of the finance minister.
”This was the case with the proposed MTN-Bharti merger, which required certain exchange control and other approvals,” the Treasury said. – Sapa-AFP