BANGALORE, 3 AUGUST 2009 - India's largest mobile services provider, Bharti Airtel, and MTN Group of South Africa, have extended by one month to August 31 their exclusive talks that could lead to an alliance between the two companies.
Bharti Airtel announced in May that it had begun tie-up talks with MTN. The two companies agreed to discuss the proposal exclusively until July 31.
Under the terms announced in May, Bharti Airtel is to acquire 49 per cent shareholding in MTN, and MTN to acquire a 36 percent economic interest in Bharti Airtel.
Together the two companies will have US$20 billion in revenue and 200 million customers, Bharti Airtel said in May.
The negotiations are aimed at working out a formula that will help both companies keep their identities after the alliance, according to informed sources.
This is second time that Bharti Airtel has been in alliance talks with MTN. The company, which has Singapore Telecommunications as a key shareholder, said last year that earlier talks fell through after disagreement on the structuring of the deal, particularly MTN's insistence that Bharti Airtel should be a subsidiary company of MTN after the deal.
Bharti Airtel, while announcing on Monday the extension of the talks, did not give a reason for the extension. The structure and the terms of the potential transaction may be adjusted to reflect further discussions between the parties, it said in a filing to the Bombay Stock Exchange.
Under the arrangement proposed in May this year by the two companies, Bharti Airtel will have substantial and governance rights in MTN, enabling it to fully consolidate the accounts of MTN.
Bharti Airtel will be the primary vehicle for the expansion of both Bharti Airtel and MTN in Asia, while MTN will focus on expansion in Africa and the Middle East.
The Indian service provider has benefited from the boom in the mobile services market in India. For the quarter ended June 30, revenue was 99.4 billion Indian rupees (US$2 billion at the exchange rate on the last day of the quarter), up by 17 percent from revenue in the same quarter in the previous year. Profits in the quarter grew by 24 per cent to 25 billion rupees.
In May, the latest month for which figures are available, India added 11.6 million new mobile subscribers, up by 35 per cent from additions in the same quarter in the previous year, according to Telecom Regulatory Authority of India (TRAI). The country had 415 million subscribers at the end of May, TRAI said.
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