MTN, Bharti call off merger talks

Thursday, October 1, 2009

Pretoria - MTN and Bharti Airtel have called off talks around a proposed merger to create the world's third largest cellphone group.

In a statement, the National Treasury said MTN had informed Finance Minister Pravin Gordhan on Wednesday that the companies had "mutually decided to terminate further discussions".

They were not able to conclude all outstanding matters to enable the transaction to proceed.

The $24bn deal would have created the third-largest telecoms company in the world, with more than 200 million customers across India, Africa and the Middle East.

Bharti had said the deal was abandoned because the South African government was unable to accept it in its current form, but the Treasury has denied that government had blocked the merger, saying it was an amicable decision by the companies.

It said the South African government was, in principle, supportive of local companies that wanted to grow and diversify offshore from a domestic base.

"We particularly welcome such diversification to emerging and developing countries, as South Africa is committed to deeper South-South relationships," it said.

While the South African government said merger talks should be left to companies, relationships outside the current foreign exchange regulations required the approval of the Finance Minister.

"However, when companies structure their relationships outside the current exchange control regulatory framework for such transactions, they require the approval of the Minister of Finance," the Treasury said, adding that this was the case with the proposed merger.

The Treasury said both the Indian and South African finance ministries were committed to working closely "to lay the basis for the development of mutually beneficial mechanisms for such mergers".

"In this regard, the National Treasury has invited our Indian counterparts to South Africa to continue working towards a framework to support the growth and expansion of companies in both countries," the statement said.