Bharti may pay 5 billion dollars in cash for MTN deal

Bharti Airtel is unlikely to face any problems raising funds to finance its $23-billion swap deal with MTN. Credit rating agency Standard & Poors has affirmed its long-term corporate credit rating at BBB-. On Tuesday, London’s Financial Times newspaper said Bharti might pay up to $5 billion in cash for the deal, citing “unidentified people familiar with the matter”.

S&P said the swap “could result in higher country risk and leverage, but within our tolerance level. The combined entity would also become a leading emerging market telecom operator”. Bharti is expected to use its cash reserves of Rs 11,000 crore (around $2.5 billion) to help bankroll the deal, for which the two companies have entered into exclusive negotiations up to July 31.

In response to a query from FE, Bharti said it wouldn’t need an onerous amount of funding.

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Bharti, MTN renew talks for 23 billion dollars swap deal

The country’s largest telecom operator, Bharti Airtel, has reopened discussions to acquire a 49% stake in South Africa’s MTN for over $23 billion in a cash-cum-stock swap, after a year-long hiatus following the breakdown of talks between the two over the combined entity’s controlling structure. In the latest round, for which the two sides have entered into exclusive negotiations until July 31, MTN and its shareholders would get 36% stake in Bharti.

In a departure from last year’s strategy of direct acquisition and merger of MTN, this time around Bharti is looking at a merger only at a later stage. “The broader strategic objective would be to achieve a full merger of MTN and Bharti as soon as it is practicable, to create a leading emerging market telecom operator,” a Bharti statement said.

If the deal materialises, the combined entity would have 200 million users—with both partners contributing an equal 100 million each—creating the world’s third-largest telecom company in terms of subscriber base after Vodafone Plc and China Mobile.

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Advantage for Bharti, Vodafone in 3G bids

Bharti Airtel and Vodafone Essar are at the most advantageous position for the upcoming 3G spectrum auction in the most lucrative and competitive circles of Delhi and Mumbai.

As per the schedule announced by the department of telecommunications (DoT) on Friday, 3G auctions would be held on January 15.

The Delhi and Mumbai circles have emerged as the most competitive as these two metro circles would be able to notch up the maximum subscribers in the 3G services fold, which enables faster download of data and video streaming on mobile phones.

The two circles have also emerged as the toughest because of the paucity of 3G spectrum in the 2.1 Ghz band here. For instance, Delhi has only three blocks of 5 mhz spectrum, of which one is reserved and already allocated to the state-owned Mahanagar Telephone Nigam Ltd (MTNL).

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UAE's Etisalat to join bid for MTN

Emirates Telecommunications Corp of UAE (Etisalat) on Monday became the second international bidder after Bharti Airtel to join the race to pick up a stake in South Africa's MTN. Etisalat, which has operations in Pakistan among 16 countries, confirmed its intent to news persons at a telecom conference in Cairo.

Meanwhile, according to industry sources, Bharti Airtel, if successful in acquiring MTN, is looking at merging the two companies instead of keeping them as two independent entities.

"We are always looking for expansion in Africa," Etisalat chairman Mohammed Omran was quoted as stating by international wire agencies. "We are evaluating MTN, among other companies. I see that within three-to-four years revenue from Africa will not be less than 25%," Omran said.

This is the first time after Bharti that any global telecom player has stated on record its interest in acquiring MTN, which has 68 million subscribers from operations spanning 21 countries of South Africa and Middle East.

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Vodafone may enter MTN race

The bidding war for South African telecom major MTN may have just started, with the largest telecom company by revenues, Vodafone, too eyeing MTN. According to foreign media reports, the company is examining a £20 billion ($39.02 billion) bid for MTN.

However, a Vodafone spokesperson told a foreign news agency in London that, “we have no intention of pursuing a bid for MTN.” Vodafone is the second largest mobile operator with about 250 million subscribers worldwide and acquisition of MTN would add the latter’s 68 million users to its fold, taking it closer to China Mobile, which is the world’s largest mobile company by subscriber base close to 400 million.

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Tatas go ahead with BlackBerry

Tata Teleservices (TTSL) has decided to proceed with the roll out of BlackBerry services, without waiting for the government permission.

The company has told the government the delay was costing it "significant loss of business opportunity and recurring revenues."

The company's step is significant as it was TTSL's application seeking permission to launch the BlackBerry services that alerted the government that the services gave no means for lawful interception. The department if telecommunication had therefore denied TTSL permission to start the services.

Other operators like Bharti Airtel, Vodafone Essar, BPL and Reliance Communications currently offer BlackBerry services. Apparently, these companies never sought the government's approval for launching the services.

The operators maintain that around the time they launched the services there was no specific provi sion mandating an approval. However, the officials contest the point.

In a recent communication to the department of telecommunications (DoT)-a copy of which is with FETTSL has written, "we are proceeding with the rollout of BlackBerry services and undertake that whatever solution is arrived at by the government through its deliberations with the BlackBerry suppliers and the operators currently offering such services will be applicable to us also, in the manner that it is made applicable to the other operators."

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