MTN seeks a 'non-compete clause' with Bharti

MTN Group might seek a 'non-compete agreement' with Bharti Airtel,
which will prevent the company to enter  21 odd markets, where the South African company operates.

Banking sources also say that Bharti  is evaluating the possibility of
paying for part of the stake in MTN  with a equity stake in Bharti Airtel.
Sources say that this is a  possibility as Bharti is able to garner a
premium of at least 10 per cent to 25 per cent on its shares from the international market.

Bharti is keen that the exisiting management continues in its present role, sources close to the deal say . Banking circles also point out that MTN management which controls over 13 per cent equity stake in the company might be looking at unlocking its value through a negotiated deal.

MTN is the largest mobile operator in the Sub-Saharan Africa and also has a large presence in West Asia. Though MTN operates in over 21countries the three most important markets for the company include Nigeria with 17.8 million subscribers, South Africa with over 15 million subscribers and Iran with over 9 million subscribers.

MTN has grown through the years both organically as well through
acquiring new licences in different markets. It also has operations in
Cameroon, Uganda, Ghana and Sudan. In July 2006, MTN acquired Investcom for US $3.5 billion adding over eleven additional operations to MTN's exisiting licences. The deal was made through a combination of debt and shares.

Bharti Airtel has been keen on opportunities in the rest of the world,
even though it has presence in Sri Lanka and Seychelles, MTN was looking at launching services in Pakistan and other developing
nations. It was also looking to enter India by picking up a
minority equity stake with Datacom Solutions-part of the Venugopal Dhoot group.

When contacted Bharti Airtel spokesperson declined to comment on the
development.Bharti Airtel was looking for a strategic stake in  MTN, which had a market capitalisation of around $37 billion. Both the companies had confirmed that there were "exploratory discussions", while no concrete deals were reached upon.

Meanwhile, brokerage and analyst firm Merrill Lynch believes that the
transaction may not be "uncontested", but there are strong synergies if
the deal materialises.

MTN has a strong presence in the African continent, especially in South
Africa and Nigeria that drives 65-70 per cent of the group's EBITDA. While South Africa is already well penetrated (87 per cent mobile penetration), Nigeria offers strong growth due to its 25 per cent penetration.