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Mittal-promoted Bharti Airtel on Monday renewed its effort for acquiring 49 per cent stake in South African telecom giant MTN and the two companies have agreed to discuss the potential transaction exclusively by 31st July this year.
If materialised, the combined entity would have revenues of over 20 billion dollars and a subscriber base of over 200 million.
"Bharti Airtel Ltd is pleased to announce that it has renewed its effort for a significant partnership with MTN Group... Bharti would acquire a 49 per cent shareholding in MTN and, in turn, MTN and its shareholders would acquire an approximate 36 per cent economic interest in Bharti, of which 25 per cent would be held by MTN with the remainder held directly by MTN shareholders," Bharti said in a statement.
Bharti and MTN have agreed to discuss the potential transaction exclusively with each other by 31st July, 2009.
The potential transaction between Bharti and MTN would create a leading telecommunications service provider group aligning Bharti's market leading Indian business with MTN's market leading African and Middle Eastern operations.
Bharti CMD Sunil Bharti Mittal said "We are delighted at the prospect of developing a partnership with MTN to create an emerging market telecom powerhouse. Both companies would stand to gain significant benefits from sharing each other s best practices in addition to savings emanating from enhanced scale."
"We see real power in the combination and we will work hard to unleash it for all our shareholders. This opportunity also represents a first of its kind in developing an Indian-African initiative that would serve as a shining example of South-South cooperation," Mittal said.
The broader strategic objective would be to achieve a full merger of MTN and Bharti as soon as it is practicable to create a leading emerging market telecom operator which today would have combined revenues of over 20 billion dollars and a combined customer base of over 200 million.
The discussions contemplate that the potential transaction, which would be achieved through a scheme of arrangement, would include MTN acquiring approximately a 25 per cent post-transaction economic interest in Bharti for an effective consideration of about 2.9 billion dollars in cash and newly-issued shares of MTN close to 25 per cent of the currently issued share capital of the South African firm.
Bharti would acquire about 36 per cent of the currently issued share capital of MTN from MTN shareholders for a consideration comprising ZAR 86.00 in cash and 0.5 newly issued Bharti shares in the form of Global Depository Receipts for every MTN share acquired which, in combination with MTN shares issued in part settlement of MTN's acquisition of nearly 25 per cent post-transaction interest in Bharti.
Bharti would have substantial participatory and governance rights in MTN enabling it to fully consolidate the accounts of MTN.
Post-transaction, Bharti would have a 49 per cent stake of the enlarged capital of MTN.
Each GDR would be equivalent to one share in Bharti and would be listed on the securities exchange operated by JSE Limited, South Africa.
"Singapore Telecommunications, a major existing shareholder of Bharti, will continue to be a strategic partner and significant shareholder after the implementation of the potential transaction," the Bharti statement said.
MTN's economic interest in Bharti would be equity accounted and would have appropriate representation on the Bharti Board, it added.
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