Nivedita Mookerji

New Delhi: Has Bharti Airtel already bid for acquiring a 51% stake in South African telecom major MTN?

Since the two companies announced late on Monday that they were in exploratory talks, thereby signalling the possibility of a deal, the industry buzz has been that Bharti has already made a bid.

An international newspaper even put out the report of a bid by Bharti saying it had arranged for $12 billion of financing for the purpose and that the rest of the acquisition cost would be met through issue of equity to MTN shareholders.

But, Bharti on Tuesday denied all of that.

“Further to the statement issued yesterday (on Monday) that Bharti Airtel Ltd has entered into exploratory discussions with MTN Group Ltd, Bharti would like to clarify that it has not made any offer to acquire the whole or part of MTN,” the company spokesperson said in a statement.

He added, “therefore, the speculation around a bid by Bharti in a section of the media is incorrect and misleading.” If there’s any transaction or agreement between the parties, its details will be released promptly, the company said.

“As a responsible listed company, Bharti will continue to uphold the highest levels of transparency and corporate governance.”

Despite Bharti’s stand on the matter, analysts continue to assess the probability of a deal between Bharti and MTN.

Vinay Jaising, Surabhi Chandna, Maheshwari Mayank and Sean Gardiner of Morgan Stanley Research said in a report on Tuesday that it’s “manageable” for Bharti to acquire MTN.

“The company may have to shell out between $9 billion and $25 billion, taking its net debt to market capitalisation from 3% currently to between 22% and 60%, which in our eyes is manageable,” they said in the report.

Morgan Stanley’s assessment is based on various scenarios wherein Bharti acquires between 20% and 50% stake in MTN at up to 20% premium.

A Citigroup research by Anand Ramachandran, Rhys D Summerton and Rahul Singh have introduced the SingTel factor to the Bharti-MTN deal.

“Given the size of any potential acquisition,we see a reasonable probability that SingTel gets directly involved with Bharti as a co-buyer…,” they said in the report. SingTel holds 30.5% in Bharti.

Other players said to be in the race for MTN are Vodafone, China Mobile and Reliance Communications.

If the Bharti-MTN deal goes through, it could be the biggest acquisition for corporate India so far, even bigger than the Tata-Corus one.

MTN has a market capitalisation of $37 billion, Bharti $42 billion.

Last week, Bharti group chairman Sunil Mittal had told the media on the sidelines of a press conference that “nobody has invited us to make a bid.”

Mittal had said, “it’s hypothetical to ask questions on who we are interested in and who is interested in us.” However, he had stressed that Bharti “is looking for opportunities all the time. Bankers do approach us with proposals, and we evaluate that at an appropriate time.”

Source : DNA