Nivedita Mookerji 
 
New Delhi: Bharti Airtel and South Africa’s leading telecom player MTN appear to be inching closer to a deal, according to investment banking sources.

Bharti group chairman Sunil Mittal, who’s on a holiday-cum-business trip to London, held a second round of talks with MTN president and CEO Phuthuma Nhleko on Wednesday at the iconic Kensington Place restaurant, sources said.

The MTN top boss had travelled to London a few days ago, perhaps for a meeting with Mittal, sources added.

Nhleko is believed to have flown back to Johannesburg, where MTN is headquartered, while Mittal is expected to return to New Delhi this weekend.

These details could not be independently confirmed with the companies concerned as officials remained tight-lipped.

Sources said Nhleko and Mittal “had a meaningful discussion” on the proposed deal. But, if at all a deal goes through, it will take time, it is learnt.

Bharti is keen to acquire 51% in MTN, whose current market capitalisation is $37 billion. Bharti’s market cap is at $42 billion.

The buzz is that Singapore-based telco, SingTel, may bid along with Bharti for a controlling stake in MTN, as reported in DNA Money on Wednesday.

While Standard Chartered Bank is advising Bharti on the deal, Goldman Sachs is advising SingTel, a merchant banking source told this paper.

Deutsche Bank and Merrill Lynch are the advisors for MTN.

Anand Ramachandran, Rhys D Summerton and Rahul Singh, analysts with Citigroup, had in a report on Tuesday said that given the size of the potential acquisition, they saw a reasonable probability that SingTel gets directly involved with Bharti as a co-buyer. SingTel holds 30.5% in Bharti.

Other players being named in the race for MTN include Vodafone, China Mobile, Orascom and Reliance Communications.

Both Bharti and MTN had earlier this week confirmed that they are in exploratory talks for a proposed deal. Bharti had said it had not made any offer to acquire the whole or a part of MTN.

Vinay Jaising, Surabhi Chandna, Maheshwari Mayank and Sean Gardiner, analysts with Morgan Stanley, said in a report 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.”

Their assessment is based on various scenarios wherein Bharti acquires between 20% and 50% stake in MTN at between 0% and 20% premium to the South African company’s share price.

Source : DNAIndia