Bharti extends talks with MTN to Aug 31

NEW DELHI, INDIA: Bharti Airtel and MTN Group extended their exclusive talks aimed at merging their operations to create the world's third-largest mobile operator by a month to August 31, after both the companies were unable to decide on potential transaction by July 31 to create their merger entity estimated to be $23 billion.

MTN has referred its shareholders to the cautionary announcement and renewal of cautionary announcement released on Stock Exchange News Service (SENS) on May 25, 2009 and July 6, 2009 concerning discussions regarding a potential transaction between MTN and Bharti Airtel.

Earlier MTN and Bharti had entered into an exclusivity agreement regarding the potential transaction of shares which was due to make decision by July 31, 2009.

Under the initial terms, MTN and its shareholders would take 36 per cent economic interest in Bharti Airtel and the Indian firm would end up with 49 per cent of MTN.

"No decision or agreement to acquire any shares or implement the potential transaction has yet been made by the Boards of either MTN or Bharti and the discussions may or may not lead to any transaction and the structure and terms of the potential transaction may be adjusted to reflect further discussions between the parties,” MTN said in a media release.

“Shareholders are therefore advised to continue to exercise caution when dealing in MTN’s securities until a further announcement is made.”

Corporate Affairs Minister Salman Khurshid had said in Parliament on Thursday that Bharti Airtel would require the government's approval for change in equity shareholding of its company and this is also seen as one reason for the extension of the talks.

However, sources from Bharti Airtel said that there is no legal or government approval pending from their company’s side for talks at this stage with MTN. He added that all the other legal clearances will be required once the deal is successfully completed.