What's delaying MTN -Bharti deal?
MTN's $23 billion deal to merge with the Indian
telecom major Bharati Airtel is being delayed as the company does not want to
"lose its identity" and wants its South African base to be the
"mother ship" of the new entity that will span two continents.
MTN
CEO Phuthuma Nhleko that the deal is a "big and complex transaction"
and the company has to ensure that it "continues to grow from its South
African base and does not lose its DNA". "We do not want to repeat what happened
some 10 years ago when there was a wholesale movement of capital from South
Africa," Nhleko told the Sunday Times.
"We
are trying to achieve our strategic objectives while the financial objectives
must remain palatable. We must ensure that the South African base is the mother
ship from which the company continues to grow."
The
proposed deal will see Bharti get a 49 percent stake in MTN with the latter
getting 36 percent in the Indian company.
The
two will merge to become a massive global player, with 200 million subscribers
between them and MTN will gain instant access to India, where Bharti has a
market share of around 25 percent.
Nhleko
said MTN's size meant that opportunities for growth from greenfields operations
in Africa and the Middle East were increasingly limited. This meant growth
through mergers and acquisitions, probably outside Africa and the Middle East,
where it is has huge interests. "
"For
us, the logical conclusion is that it has to be eastwards. About 70 percent of
new global subscribers in 2010 will be from China and India," Nhleko said.
"What's ideal is a full
integration. But there are all sorts of regulatory, political and national
identity issues we have to consider if we were to fully integrate the
companies," Nhleko said.
He
said SingTel was "an integral part of the deal", not only because it
will lower costs but also because of additional synergies. "SIngtel has a strong innovative hub in
Singapore and there is an understanding that there will be symbiosis, and we
will then have a far larger innovative base," Nhleko said.
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