Bharti calls off talks with MTN; alleges breach of terms of agreement

24 May 2008

Bharti Airtel has called off negotiations with MTN for a possible acquisition of the South African telecom company, for an estimated $45-50 billion, alleging that MTN veered off the agreed terms of transaction.

"An in-principle agreement was reached on 16 May and a term sheet was initialled between two lead bankers... MTN has now presented a completely different structure, from what was agreed," Bharti said in a statement.

The new structure presented by MTN envisaged Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Indian company held by Sunil Mittal, promoter of Bharti, family and its foreign partner Singtel, in exchange for a controlling stake in MTN.

"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.

Bharti and MTN started merger talks early this month to create an emerging markets giant and the world's sixth largest mobile phone company with over 130 million subscribers in around two dozen countries.

Bharti, 30.5 per cent owned by Singapore Telecommunications, was eyeing a 51 per cent stake in MTN, either through acquisition or a merger, in a deal that would value MTN at around $50 billion.