New Sebi norms may jinx Bharti-MTN deal

For its part,a statement issued by Bharti on the subject said,“We can confirm that the structure under discussion with MTN will be fully compliant with the laws in both the countries. All relevant approvals,including exemption from open offer from Sebi (if required),would be sought at an appropriate time.”

The sources said that instead of extending the talks a third time,both sides are likely to initial a memorandum of understanding and thrash out the details later. It is hoped that this would keep the momentum of the discussions going,while mollifying stock markets in both countries expecting a September 30 deal. The announcement of the MoU is expected after the MTN board meets on September 27.

By then,some clarity is expected on the crucial subject of dual listing,the absence of which in India is at worst being seen as a deal-breaker,and at best a reason for wary MTN shareholders to hold out for more cash. The South African government also sees dual listing as a way to ensure MTN retains its individual identity,even after a deal with Bharti is signed.

South African government officials are already in Mumbai for talks with their counterparts in Sebi and RBI on the subject. They will meet with finance ministry officials in New Delhi on Thursday.

The proposed meeting between Prime Minister Manmohan Singh and South African President Jacob Zuma on the sidelines of the G-20 summit in Pittsburgh later this week would also provide an indication whether India is willing to look into allowing dual listing in future.

In a run-up to that,Bharti CMD Sunil Mittal on Tuesday met Prime Minister Manmohan Singh for a second time and is understood to have discussed the issue of dual listing. Mittal’s first meeting with the PM on the MTN talks was on September 18.

Sebi on Tuesday said it had not received an application for dual listing. Bhave told reporters it was too premature to comment on the issue.

Even as the spotlight shone on the issue of dual listing,there were some positive signals emanating from the government. Communications & IT minister A Raja said on Tuesday that if the Bharti-MTN deal required changes in the licensing conditions,his ministry would urge telecom regulator Trai to look into them. However,Raja added that at the moment,his ministry had no role to play in the deal.

Bharti and MTN are looking at an agreement to create the world’s third-largest mobile firm with over 200 million subscribers and revenues in excess of $20 billion. According to the structure outlined by the two sides so far,MTN and its shareholders would acquire 36% stake in Bharti. Bharti would acquire 49% in MTN. This process would be through the issuance of GDRs.

This complex process would see a $13-billion transaction in cash and $10 billion in shares. However,MTN shareholders have been unhappy over the pricing and consistently asked for a sweetener. Bharti has reportedly revised the cash offer to $14 billion.