Mobile operator MTN has been unable to conclude a proposed merger with India's Bharti Airtel.
According to I-Net Bridge, MTN states this is due to “the economic, legal and regulatory framework within which both companies operate".
"Accordingly, MTN and Bharti have mutually decided to terminate further discussions regarding the potential transaction," MTN said in a statement.
Business Day reports this morning that the Indian telecoms group said the South African government did not accept the deal as it stood. The rand reportedly weakened by 2% on the news of the failed deal.
South African treasury officials returned from a visit to India on Saturday, after meeting with Indian officials to discuss regulatory matters surrounding the proposed deal. The officials briefed the financial minister on Monday.
The $23 billion deal would have seen Bharti acquire 49% of MTN, and MTN and its shareholders acquire 36% of the Indian operator.
However, among the other complexities of the deal, there was an issue with MTN taking up a dual listing in India, which would require a change in legislation.
Local analysts had expected the $23 billion deal to proceed. “I don't think that they'll go this far down the track and let it drop,” said Chris Gilmour, analyst at Absa Investments.
He pointed to the fact that Bharti has already sweetened its offer to MTN shareholders, and that there seemed to be commitment from the Indian government to making the deal happen.
Trade unions had expressed concern that the merger would result in job losses, should it proceed. “If the merger eventually leads to job losses, Solidarity will by no means support it,” said union spokesman Jaco Kleynhans.
The Independent Communications Authority of SA took a wait-and-see stance. However, communications minister Siphiwe Nyanda expressed caution over the proposed tie-up, and warned that MTN should remain in Africa.
MTN government shareholder Public Investment Corporation, which owned 13.5% of MTN at the end of the 2008 financial year, had expressed conditional support for the deal.
Business Day reports this morning that another MTN shareholder, Coronation Fund Managers, has welcomed the decision to abandon the merger.
Meanwhile, the MTN board thanked all parties involved in “these lengthy negotiations for the positive and constructive manner in which the negotiations were conducted”.
MTN also expressed its appreciation to the South African and the Indian governments for their “co-operation and supportive approach”.
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