Apr 9, 2023 1

&

Deal OR No Deal

Phuthuma Nhleko

Apr 9, 2023 2

THE BHARTI-MTN SAGA

CHRONOLOGICAL

ORDER

2008

2009

5 May: MTN says it is in

talkswith Bharti

Airtel.

24 May: Bharti says it

hasended talks with MTN

afterfailing to agree on

which firmwill control a

combined entity.

25 May: Bharti and

MTNannounce revival of

merger talks to create a

telecom giant

29 May: many top

shareholders of MTN started supporting the

deal ($23 billion), but they were

looking for sum price

improvements

28 July: MTN's second largest

shareholder says the

company islikely to reach an agreement

3 Aug: Bharti and MTN

extendexclusive talks by a month.

Oct 1, 2009:The deal was

finally called off dual to

involvement of south African Government, issue of dual

listing and various policies related to FDI.

3 July: State Bank of India

offersa loan of up to $1 billion

to Bharti.

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IncompatibilityCONFLICT

•MTN is an MNC

1

•Core operations in 24 countries

2

•Presence in key markets such as Nigeria, Ghana, Cameroon, etc.

3

•Listed in South Africa on the (JSE)

4

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CONFLICT cont.

• Bharti looked to acquire 51% stake in MTN while MTN wanted Bharti to buy out the 100 % stake.

5

• India Denied for dual listing

6

• Finance ministry and RBI are divided on FDI norms.

7

• Culture Difference

8

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Perception & Awareness

PERCEIVED CONFLICT

•Finance ministry and RBI on FDI norms.

•Pressure form banks involved.

•Changes in takeover norms by SEBI.

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FELT CONFLICT

•South African regulators’ and unions’ concerns about foreign control of “national champions”.

•Cultural Differences

•Identity Problem – The South African government has made clear that it will not let go of the South African Identity of MTN

•Bharti’s concern of high risk and debt.

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Intentions

Competition Collaboration Compromising

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Behavior Dimension

Overt questioning or challenging of others

Minor disagreement or misunderstandings

Intensify negotiations

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Outcomes

DYSFUNCTIONAL OUTCOMES

Deal called off

Banks lose $50 mn fees as Bharti-MTN called off

The share price of Bharti , almost decreased by 8% after deal called off.

Bharti’s efforts of becoming an MNC failed.

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Conclusion

The deal appeared to offer growth as well as scale to both operators

MTN offered Bharti more growth options than the other way round

The convertibility of the rupee in India was the main obstacle

Indian government is not willing to change laws for a single company

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