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Bharti says no to MTN

MTN wanted Bharti to become subsidiary, says Indian telco

Bharti Airtel yesterday said it would discontinue talks with MTN over a proposed merger, saying the South Africa-based telecoms group had "presented a completely different structure from what was agreed".

The two companies reached an in-principle agreement on 16th May, and a term sheet was initialed between the two lead bankers. Bharti also said that US and European lenders were ready to pledge $60 billion of funding for the deal, worth up to $44 billion. However, MTN reportedly proposed that Bharti become its subsidiary - a structure that the Indian telco believes would compromise its shareholder interests and weaken synergies.

"Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity," the company said in a statement.

"Further and more importantly, Bharti's vision of transforming itself from a home grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti," it added.

According to Bharti, the companies were very close to finalising the deal, with MTN's share price frozen. But the new corporate structure proved to be a stumbling block, and talks broke down on Friday. Bharti added that it was still interested in looking at overseas opportunities.

"Bharti remains keen to expand in the International arena and will continue to look at opportunities that are consistent with its vision to be a true Indian company that plays a significant role in transforming global telecommunications," it said.

The news could open the door now for Etisalat, which is also reportedly considering a bid for MTN.