The Deal
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The Deal

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    The Deal The Deal Presentation Transcript

    • Presented By Dhaval Ambani Business Communication
    • Bharti Airtel Details
      • Airtel comes to you from Bharti Airtel Limited.
      • Bharti India’s largest telecom services provider with a revenue of about Rs 37,000 crore (Rs 370 billion), market capitalisation of over Rs 1.60 lakh crore (Rs 1.60 trillion),
      • 3 Strategic Business Units (SBU’s)
      • Mobile Services, Airtel Telemedia Services & Enterprise Services.
      • The mobile business provides mobile & fixed wireless services using GSM technology across 23 telecom circles.
      • Airtel Telemedia Services business offers broadband & telephone services in 95 cities. Recently launched India's best Direct-to-Home (DTH) service, Airtel digital TV.
      • The Enterprise services provide end-to-end telecom solutions to corporate customers.
    • MTN Details
      • Company Profile
      • Launched in 1994 The MTN Group Limited (MTN Group)
      • MTN is a global player operating in about two dozen countries.
      • Offering cellular network access and business solutions.
      • Listed in South Africa on the Johannesburg Securities Exchange (JSE) Telecommunications sector.  
      • Multinational telecommunications provider, with its core operations in 21 countries in Africa and the Middle East, 90,7 million recorded subscribers (December 2008)
    • CALL LOG 2008 May 6: Bharti Airtel begin talks with MTN to buy stake in the South African company May 25: Bharti and MTN call off talks May 27: Reliance Communications (RCom) and MTN sign a 45-day exclusivity agreement to negotiate a deal Jul 19: RCom and MTN call off talks 2009 May 25: Bharti-MTN announce talks for a $23-billion share-swap-and-cash deal. Deadline set for July 31 Aug 3: Bharti-MTN extend deadline from July 31 to August 31 Aug 20: Bharti-MTN extend deadline again to September 30 Sep 14: South African government says MTN’s ‘South African character’ must be maintained Sep 15: Indian government says open to dual listing in India Sep 24: Officials from the South African government meet Sebi, RBI and finance ministry mandarins
    • The Deal
      • Bharti on offered 86 rand ($11.4 billion) in cash and 36 per cent stake in Bharti for each MTN share for a 49 percent stake.
    • Deal benefits to Bharti
      • Increase in annual sales of $20 billion and 200 million wireless subscribers from Johannesburg to Mumbai.
      • Would become 49% stake holder of South Africa biggest wireless service provider
      • The combined operation would have helped Mittal’s Bharti increase overseas sales at a time when Reliance and Vodafone are narrowing its lead in India.
      • Competition is also intensifying with the entry of more foreign rivals including Japan’s NTT DoCoMo Inc.
    • Challenged by Indian Investors Protection Council (IIPC)
      • Mittal Brothers alone will acquire 49 per cent of equity shares with voting rights in one shot,.
      • MTN and its shareholders will be issued 36 per cent of GDRs with voting rights only upon conversion into equity shares — 25 per cent in Bharti Airtel and 11 per cent shares from Bharti Telecom.
      • This makes merger only between promoters and not between the two listed company i.e. Bharti Airtel and MTN
    • The Hurdles
      • South African considers MTN as a crown jewel
      • South Africa government holds 21 % stake through Public Investment Corporation
      • Wanted to maintain MTN’s “South African character” and was looking for a different structure for the deal.
    • No Dual Listing
      • Dual listing structure would have rendered India’s foreign direct investment policy , led to huge tax losses to the government.
      • Weakened market regulator SEBI unable to monitor overseas stock exchanges – MTN listed Johannesburg Securities Exchange
    • Conclusion
      • The deal fell because of South Africa's political compulsions & SEBI regulations