According to a report in Business Standard, Bharti Airtel and SingTel (which owns a 32-per cent stake in the Airtel's holding company, Bharti Telecom) will jointly own float a new company to act as a special purpose vehicle to acquire MTN, so as not to load Bharti Airtel's balance sheet with debt for funding the acquisition. The other shareholders of Bharti Telecom are, Vodafone with 10 per cent and Suni Mittal, who owns the remaining stake.

Singtel may be pivotal in the final structure to the valuation of MTN in the deal, which reports say could rise to as much as $50 billion including debt, from the $41 billion currently.

Quoting unnamed sources, the report says the new company will raise funds, including bridge loans and later consider selling American depository receipts or global depository receipts to repay the bridge loan. Bharti is said to be looking t $15 billion for the cash portion of the cash and share deal with MTN, while shares in the new firm would be offered to MTN shareholders for the share component.

The remiander of the cash amount will be financed through internal accruals and an issue of new shares in Bharti Airtel and Bharti Telecom, the report added.

This will also help Bahrti Airtel stay within the 74 per cent FDI limit in the telecom sector. So far, it already has an effective 68 per cent foreign ownership, leaving little scope for further FDI.

"The stake to be offered to MTN would depend on the cash-share ratio, which is yet to be finalised between Bharti and MTN. Bharti Airtel would raise funds by diluting the equity of the SPV and, if needed, the promoters' stake in Bharti and that of its partner SingTel to part-finance the deal," the newspaper said.

The major shareholders in the new company would be the major shareholders of the two telecom companies - Sunil Mittal, chairman of Bharti, Singtel, a 30.5-per cent shareholder of Bharti; the Mikati family, a 9.8 per cent shareholder in MTN and the management of MTN that owns a stake in its business and financial institutions.

Sunil Mittal, who has already received the backing of the Mikati family (See: Bharti closer to $20-billion MTN deal as major shareholder Mikati expresses confidence), will be meeting the institutional shareholders of MTN, to win their backing in the event of Etisalat making a counter bid.

The areas of differences between MTN and Bharti are reported to have narrowed down to favour a a combination between the two. For one, the African telecom company has agreed that Bharti could acquire 100 per cent stake in it in a cash-cum-share deal, with equal management representation in a team with Sunil Mittal as chairman and MTN CEO Phuthuma Nhleko as CEO of the merged entity.

Moreover, Bharti is said to be willing to accept a valuation of the African company of $45 billion for MTN's asking price of $50 billion. Officially, however, Bharti has said it had nothing further to add to its last communication on  5 May that it was in exploratory talks with MTN.
Last week it was reported to have approached Middle East sovereign wealth funds for funding for the deal.(See: Bharti seeks Gulf funds for MTN bid as UAE's Etisalat plans to join race) 

Despite having reached proximity to concluding their pre-deal negotiations, there have bween hints of a possible rival bid emerging, the though UAE government's  telecom arm, Etisalat, is the only one to have said that it was evaluating the possibility of a bid for MTN. At the same time investment bank JP Morgan said in a research report that Egypt's Orascom and  Saudi Tlecom could be interested itn MTN as well. And while China Mobile has said it was interested in an African presence, it was not contemplating bidding for MTN.

Even MTN's CEO Phuthuma Nhleko, who has been credited with the growth of the company, has said a European firm interested in an African presence could not be ruled out at a emerging a bidder at a later date.

Nhelko was also quoted by German magazine Wirtschaftswoche as having said that MTN was interested in expanding in Asia, telecom mergers were expected to take place in the future.

Meanwhile the Mint newspaper reported that US lenders and investment banks could potentially be disallowed from financing Bharti's acquisition of MTN, which has networks in Iran, Syria, Cote d'Ivoire and Liberia as these countries are blacklisted by the US government's Office of Foreign Assets Control (Ofac) rules, which ban US entities from dealing those having any deals with banned countries or entities.

It remians to be seen how the operating structuire of the networksin these countires under the US blacklist will be structured so as not to jeopardise the deal for the remaining operations of MTN in the event of the acquisition succeeding.