SA lends political push to MTN deal

In an attempt to save the multi-billion trans-continental Bharti-MTN deal, treasury officials from South Africa will be in India on Tuesday to sort out various regulatory issues holding up the deal with officials in the finance ministry, the RBI and the Sebi

“This is now more of a political-economic deal rather than pure economic,” said a senior government official.

The South African government is keen that the deal should not compromise the “South African character” of MTN. It has recommended to the Indian government to allow dual listing of the companies.

A dual listed company (DLCs) involves two listed companies that have different sets of shareholders but share ownership of a single business operation. South Africa allows dual listing while India does not. It would involve substantial changes in foreign exchange and stock market laws and full cabinet approval for India to allow DLCs. It is still not clear whether the finance ministry is willing to make such drastic change in the law to facilitate a single deal.

The finance minister, Mr Pranab Mukherjee, had discussed the matter of dual listing with his South African counterpart, Mr Pravin Gordhan, at London in a G20 meeting. “There is no assurance as such, but I told him that we will look into this matter and we will see what can be done,” Mr Mukherjee had said.

The South African communications minister, Mr Siphiwe Nyanda, had said that MTN was a “South African company with a footprint in Africa and we are interested that it should remain [here]”.

The state-owned pension fund Public Investment Corporation is the largest shareholder in MTN with 21 per cent stake. Bharti and MTN revived merger talks in May, a year after previous talks broke down over who would control a merged entity. As per the merger proposal Bharti plans to acquire 49 per cent stake in MTN and in turn, MTN will acquire 36 per cent stake in Bharti. The merger will create a giant telecom company with 200 million customers across Asia, Africa and Middle East in a deal initially estimated at $23 billion.

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