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Last updated: Thursday, May 28, 2009

What does the CEO of a company do when its best growth years are behind him? If you’re Sunil Mittal, who runs Indian telecom giant Bharti Airtel, you go shopping. Airtel, which runs cell-phone networks across India, and South Africa’s MTN, the largest cell-phone operator in Africa, made a brief statement to shareholders on May 25 that they were hammering out a complex deal which would merge the companies. If successful, the deal would likely give Mittal control of a telecom behemoth that would have the third-largest number of subscribers in the world, after U.K.-based Vodafone and China Mobile, with annual revenues in excess of $20 billion. As expected, Airtel shares plunged and MTN shares climbed. But the negotiations so far have resulted in a deal that only an investment banker would love — complex enough that retail investors will get headaches trying to figure out exactly what’s happening. “It’s so convoluted because there are so many different stakeholders to keep in mind,” says Yash Rana, a Hong Kong-based partner at Goodwin Proctor who specializes in Indian mergers and acquisitions. “Ultimately they are working towards a merger where Bharti will control, but until that happens, MTN wants to show that they are an independent company with independent motives.” Mittal has had his eye on MTN for a while, having tried in May 2008 to complete a union. Those talks fell apart, as did subsequent talks that MTN had with Airtel rival Reliance Communications, run by billionaire Anil Ambani, the younger of two squabbling brothers who run a bunch of India’s most valuable companies. MTN’s Access to Growth Markets MTN is a prize catch for Airtel, if it can reel it in. Airtel celebrated its 100 millionth customer earlier this month — a meteoric rise for a company that’s barely a decade old. But the next…

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Complex Merger Talks for Bharti Airtel and MTN

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