MTN, Bharti deal close

MTN may be trying to realign market expectations around its possible tie up with Indian operator Bharti Airtel.

Speaking at the company's interim results presentation yesterday, CEO Phuthuma Nhleko explained the initial proposed deal, published in a bourse communication earlier this year, may not be the shape of the deal, when or if an agreement is reached.

“This is an evolving situation and whatever was published then may well change, or may stay the same. We have given ourselves to the end of September to try and achieve something that's palatable to us and shareholders,” he says.

The deal being considered is one of the more complicated in the industry, initially proposing MTN and its shareholders take up a 36% stake in Bharti, of which MTN would own 25%. In turn, Bharti would acquire 49% in MTN.

MTN shareholders have been hoping that Bharti would sweeten the deal, and while Nhleko did not expand on whether a better offer was on the table, he is adamant about getting the best value for MTN.

Despite international speculation that an amicable deal was imminent, the telcos extended talks for the second time at the beginning of this month, frustrating eager shareholders in both companies.

The second extension has caused mixed reactions from industry analysts, with some saying the delay could indicate a breakdown in talks. Others believe a positive end is in sight, and the extension is just adding time for finalisations.

During MTN's results presentation yesterday, some analysts questioned whether a Bharti, MTN tie-up held any value for either company.

However, Frost & Sullivan senior ICT industry analyst Lindsey Mc Donald says there are synergies between the companies. “Each operator has a unique understanding of its market and they would be well placed to support one another's expansion into other emerging markets.”

She says there is unlikely to be a rebranding exercise. Nhleko has confirmed that, despite the large ownership structures, the companies will operate under their own brands. “There is great hope that the deal does come to fruition, as this would be a remarkable win for a South African company,” adds Mc Donald.

While shareholders wait for a decision on Bharti, the protracted discussions have also pushed MTN's empowerment plans into the background.

Nhleko says the company will return to its focus on implementing an empowerment programme over the next 12 months. “We did promise that, as soon as conditions were conducive, we would implement the BEE deal. The Bharti discussions have delayed that a little, but we remain committed to it.”

The empowerment deal was supposed to be implemented earlier this year, when the company wound up its Newshelf scheme. However, MTN at the time said the global economic crisis had prevented it from following through on the empowerment deal.

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