Bharti-MTN: Innovatively structured deal

26 May 2009

Bharti-Airtel and South Africa's largest mobile operator MTN are talking for a strategic partnership, which will see Bharti acquire a 49 per cent shareholding in MTN, which along with its shareholders would acquire an approximate 36 per cent "economic interest" in Bharti.

What does it mean for Bharti to move beyond the Indian market? Does the African market represent a huge potential? And finally what kind of legal hurdles or challenges will this deal have to face?

Rajya Sabha MP, Rajeev Chandrasekhar, the founder, BPL Mobile, told CNBC-TV18 that it was an excellent move "and if Bharti intends to move to number two or three position, it needs take a leap as big as this,'' Chandrasekhar said.

According to Abizer Diwanji, head, financial services, KPMG, ''The deal is innovatively structured," a view reiterated by Vivek Gupta from chartered acountancy firm BMR Associates, who, going by the text of the Bharti press release, says, " The overall deal would be predicated to a large extent upon the ability in not having to do a public offer in India."

CNBC-TV18 shares with domain-b its excluisive interview with Chndrasekhar and Diwanji

Sunil Mittal has put in the press release as a great South-South deal. What do you think it means for an Indian telecommunications company to go out there and try and cash in on African growth. Do you think there are is much growth to be had? Do you think there is that much strategic value to this deal?
Rajeev Chandrasekhar: Prima facie, from what I see, this is an excellent deal because if we look at it from Airtel's point of view, growth in India is bound to taper off over the next few years and if they really want to make a strategic jump into the big three and go from number five or six they are today as a franchise and move to being the third or second largest operator in the world, they need to do something like this.