Things are falling in place fast for Sunil Mittal, and he’s nearly sealed the gigantic $20 billion buyout of majority stake in MTN investment banking sources said.
SingTel could buy shares of African operator to part-finance acquisition l Mittal rushes back from London for last-minute parleys
NEW DELHI: Things are falling in place fast for Sunil Mittal, and he’s nearly sealed the gigantic $20 billion buyout of majority stake in MTN, the African mobile phone operator, investment banking sources said.
The Bharti Airtel chairman cut short his “working holiday” and returned from London on Friday, after “advanced negotiations” with Phuthuma Nhleko, the CEO of MTN.
On the other side, the family of Najeeb Makati, which owns 9.8% in MTN through his London-based family firm M1, welcomed Mittal with open arms.
And the third player in the acquisition process, Singapore-based SingTel, which directly and indirectly holds 30.5% in Bharti Airtel, is likely to help Mittal raise money by buying shares of MTN, which will be through a dilution process following the acquisition, sources said.
Azim Makati, Najeeb’s son, was effusive on Friday: “I don’t see the Bharti transaction as a sale. It is really combining two great assets in what could become a really unique player in the emerging market of the mobile industry,” he told Dow Jones Newswires on Friday.
He said the discussion is being led by MTN’s management, and M1 has full confidence in the management.
“We are supportive of any decision the MTN management makes. We have seen what Bharti has done in India and it’s exceptional,” Azim said.
Bharti is going for debt financing of about $12 billion, while the remaining cost of acquisition —- pegged between $7 billion and $8 billion —- could be funded through the issue of MTN equity to SingTel.
Standard Chartered is advising Bharti and Goldman Sachs is advising SingTel.
So, where exactly does the proposed deal stand at this point?
An investment banking source said final terms are being negotiated and financing being arranged, indicating the deal is quite nigh.While Bharti is believed to have offered to pay 165 rands per share of MTN, the asking price could go up to 180 rands per share, it is believed.
At the current market price, MTN is valued at over 150 rands per share.
MTN operates across 21 markets and has over 68 million subscribers. Its market capitalisation is $37 billion, against Bharti’s $42 billion. Bharti has a subscriber base of 62 million.
According to Bharti top executives, the company wants to replicate its model of low Arpu (average revenue per user) and high Mou (minutes of usage) in emerging markets such as South Africa, through controlling stakes in local firms.
m_nivedita@dnaindia.net
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