Mittal pursues MTN offer

By Our Special Correspondent

Mumbai, May 8: Bharti Airtel is reportedly in advanced talks with South African telecom major MTN and could well make some definitive announcement in the coming days.

According to Johannesburg-based sources, Bharti’s offer is considered low and unless it sweetens the offer, the deal may not materialise.

Ironically, MTN’s shares have risen over five per cent after Bharti’s offer for 51 per cent stake. This makes Bharti’s offer price almost equal to the current share price of MTN.

Bharti is said to be offering 165 rands per share and MTN’s shareholders feel that this grossly undervalues the company which has a presence in over 21 countries and has tremendous growth potential.

"I want my MTN shares, I don’t want 165 rands because in two or three years it’s going to be worth much more, maybe 300 rands," Irnest Kaplan, managing director of Johannesburg-based Kaplan Equity Analysts, has been quoted by the local media as saying. Many other shareholders have echoed the same sentiments.

Bharti Airtel’s chairman, Mr Sunil Mittal, is silent on the whole issue. Apart from the company saying that no firm offer has been made, there have been indications that Mr Mittal is in London and has been in touch with the MTN chief executive officer, Mr Phuthuma Nhleko.

Investors had hammered down the Bharti stock for two days but on Thursday the stock was up Rs 11.80. Much of the investors concerns are over the funding of this takeover which has been billed as the mother of all takeovers, if it materialises.

Bharti will have to raise $11 billion in debt to finance the deal and its own cash flow is around $1 billion. According to sources, the MTN shareholders would not be amenable to taking Bharti shares in lieu of MTN’s, and would want an all cash deal.

The Mittal family has a 27 per cent shareholding in Bharti Airtel and Singapore’s Singtel owns 31 per cent. According to Japanese brokerage firm Nomura Securities, Singtel may be in a position to join Bharti in the bid for take in MTN.

However, Singtel has till now remained on the sidelines and not commented on the ongoing discussions and speculation.