INDIAN mobile operator Bharti Airtel and South African network MTN have restarted tie-up talks, rekindling hopes of a $23bn (£14.5bn) transaction to create a telecoms giant.
The complex deal, which would eclipse HM Treasury’s purchase of a $22.3bn stake in Lloyds Banking Group and be the largest non-pharmaceutical sector merger in 2009, would see both firms pass shares and cash to each other in a cross-shareholding deal.
Bharti saw its shares fall by more than eight per cent to 807 rupees yesterday, after they initially jumped by 8.5 per cent, after it told markets the deal to buy 49 per cent of South Africa’s largest mobile firm would initially dilute its earnings.
The group said it expects earnings-per-share to pick up after the first year. Analysts said the transaction would pave the way for a $61bn mobile telecoms giant and that the combined firm would have over 200m subscribers.
Unicon Financial Intermediaries chief executive Gajendra Nagpal said: “These kind of deals take time to bear fruit. Look at the size of the company they will be creating. If you look at it from a long-term perspective, it is a step in the right direction.”
MTN shares rose by 4.7 per cent on the announcement it plans to take an effective 36 per cent stake in Bharti. The groups said the talks are at an early stage and they have set a deadline of 31 July.
The announcement came a year after previous talks between the two companies broke down over who would control a merged entity. The South African firm had proposed a new structure that would have seen Bharti become an MTN unit.