Bharti Airtel, India's largest telecom company, had been in talks with MTN, a large South African telecom company, about a potential acquisition. The proposed deal would have Bharti Airtel acquire a 49% stake in MTN for $11.4 billion in cash and a 36% stake in Bharti Airtel in exchange. However, the deal faced hurdles from the South African government, which wanted to maintain MTN's status as a national champion, as well as issues with Indian regulations regarding dual listings. Ultimately, the deal fell through due to these political and regulatory challenges.

1. Presented By Dhaval Ambani Business Communication

2. 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.

3. 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)

4. 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

5. 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.

6. 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.

7. 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

8. 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.

9. 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

10. Conclusion The deal fell because of South Africa's political compulsions & SEBI regulations