Telecom giant Bharti Airtel today called off discussions with MTN for the $23-billion merger deal saying the South African government has rejected the proposed structure.
This is the second time in just over a year when Sunil Mittal-led Bharti Airtel has been forced to abandon talks for amalgamation of the two organisations in a complex deal that also required Indian government's clearance for dual listing.
"The structure needed an approval from the government of South Africa, which has expressed its inability to accept it in the current form," Bharti said in a statement while applauding the support given to the proposed deal by Finance Minister Pranab Mukherjee and others.
The broad structure being discussed by the two companies had taken into account the sensibilities and sensitivities of both firms and both their countries.
"This transaction would have been the single largest FDI into South Africa and one of the largest outbound FDIs from India," Bharti statement said, adding "... We hope the South African government will review its position in the future and allow both companies an opportunity to re-engage."
Senior management of Bharti, including Sunil Mittal, could not be reached immediately for comments as they are on a annual off-site, most likely in Pataya, Thailand.
The decision to call off the negotiations has come just a day after Finance Minister Pranab Mukherjee's remarks that the government has a positive approach towards the deal.
"Both Prime Minister Manmohan Singh and myself have said that we are taking a positive approach and outlook towards it," Mukherjee had said.
Corporate Affairs Minister Salman Khurshid today said that the discussions between the two has not reached at a stage to get regulatory clearances as the two firms are still discussing the structure of the deal.
As per the proposed structure, Bharti would have acquired 49 per cent shareholding in MTN and in turn MTN and its shareholders would acquire about 36 per cent economic interest in Bharti.
The South African government had demanded dual listing of MTN in order to protect the character of MTN as South African entity.
