Follow on Google News News By Tag Industry News News By Place Country(s) Industry News
Follow on Google News | Bharti-MTN’s Transnational Telco Deal: 2009’s 3rd Largest in the World.Bharti Airtel with 100million subscribers in India sub-continent market has re-launched an audacious merger bid with South Africa’s MTN also with 100 million subscribers in Africa.
By: Isaac Fadeyibi The two firms on Monday, 25th May 2009 revealed that • Bharti will buy 36% of MTN existing equity from MTN shareholders. It will pay for this in two parts- a cash portion of 86 Rand (US$10.34) per share totaling US$7.03 billion; and half a Bharti Airtel share for every MTN share it gets (about 34 Crore shares worth roughly $6.2bn as at Friday’s 22nd May 2009 market share price) • MTN will buy 25% of Bharti Airtel’s post-deal equity through fresh issue of Bharti shares. It will pay for this again in two parts- US$2.89bn in cash and fresh issue of MTN share to Bharti equivalent of 25% of MTN existing equity (worth US$7bn) • At the end of this complex swap, Bharti will hold about 48.8% expanded equity, while MTN will hold roughly 36.4% of Bharti’s enhanced equity. Bharti will then have to pay MTN net cash amounted to US$4.14bn. MTN CEO Phuthuma Nhleko said “we are excited at the prospect of teaming up with Bharti, India’s number one wireless operator and one of the most strongly capitalized players amongst its emerging market peer group. This will create a highly visible commercial partnership between South Africa and India” While his counterpart Sunnil Bharti Mittal, CMD of Bharti, said “we are delighted at the prospect of developing a partnership with MTN to create an emerging market telecom powerhouse. Both companies will stand to gain significant benefits, including reduced costs from enhanced sale”. Furthermore, the proposed US$23-29 billion deal if goes through, it would be biggest ever, M&A transaction involving an Indian company, almost double the previous highest of US$13 paid by Tata Steel for Corus. It would also be the third largest deal in the world in 2009 so far, after Pfizer’s US$64bn buyout of Wyeth and Merck’s US$46bn deal with Schering-Plough. If Pharma is excluded, Bharti-MTN deal would be the largest at the moment in the world in 2009. Bharti-MTN’s combined subscribers’ In his own view about the Airtel-MTN M&A deal, Kunal Bajaj, MD Telecom consulting firm BDA, India. “Bharti is in a far stronger position today than it was a year ago. It has strengthened its subscriber’s base, maintained its EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) It could be recalled that previous talks collapse May 2008 when MTN proposed a new structure that would have seen Bharti becomes an MTN unit. MTN also held talks with Bharti’s rival Reliance Communications soon after, but it failed. If the latest M&A deal talks work out. Bharti will become MTN’s largest shareholder. Bharti Telecom will continue to be the largest shareholder in Bharti together with MTN and SingTel will have a majority economic interest in Bharti. Bharti’s investor base will be widened by existing MTN a shareholder holding a direct economic interest through fresh Global Depositary Receipts’ (GDR) proposed to be listed on Johannesburg Stock Exchange. While the stakeholders and observers await the final decision of the Bharti-MTN’s M&A exclusive discussion which is scheduled to be concluded on the 31st July 2009. The ultimate strategic objective is to become a full merger of MTN and Bharti Footnote: Additional information from TOI, 26th May 2009 edition and Telecom Tiger Newsletter. # # # Marketing/Sales Consulting in the highly competitive Business enviroment, Telecom Management Consultancy with special interest in Marketing and Branding. Marketing Reseach and Development in the dynamic business enviroment End
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
