Bharti Airtel, MTN call off merger talks

[jayanthi mandhalapu]

According to latest update, India's telecom giant, Bharti Airtel's efforts of forging a transnational alliance with Africa's largest telco MTN were crushed for the second time in less than two years, after South African government refused to soften its stance on the proposed deal structure.

After the expiry of the September 30 deadline, both companies have decided to call off the deal as the government expressed its inability to accept it in the current form.

Since the beginning of the year, both companies and their advisors and bankers had worked on the transaction and formulated an agreement for $24-billion alliance with over 200 million subscribers.

The South African government desires the prior nod from Indian government for dual listing before their clearance, which may be the reason for the deal's fate. "Dual listing Companies" (DLCs) allows both companies to retain their separate legal identities and listings on stock exchanges while having equal agreements to collectively run operations and share profits or losses.

However, Bharti has not fully withdrawn from the deal, but wanted an assurance from the Indian government that it would amend laws to allow DLCs. The call off pulled down MTN's shares by 5.5% during early trading.