MTN deal may hit dead end

The finance ministry, Sebi and RBI officials are expected to meet treasury officials from South Africa on Thursday to discuss the irritants holding up the multi-billion Bharti-MTN deal.
While the Indian government is keen to help the deal, finance ministry sources said that dual listing is not something which could be put “on fast track”.
“There are many issues to be resolved like full convertibility before the dual listing is to be considered. Currently allowing dual listing is not on our radar,” said finance ministry sources. The government will also have to amend the company laws for dual listing. The finance ministry will try to see if it can meet the concerns of the South African government in the current policy frame work, said sources, as the ministry of external affairs is keen for the deal to go through. It would be in the interest of south-south cooperation.
“We welcome the deal but in context of the law of the land. There are some legal implications which are being looked into. Dual listing is also linked with full-convertibility and all this should be looked into,” the finance minister Pranab Mukherjee said in Kolkata on Wednesday.
South African government is keen that the local character of MTN should not be compromised due to the deal with Bharti. MTN is one of the largest companies in South Africa and is considered as a jewel. It has, therefore, recommended 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.
The finance ministry also said that Bharti Airtel will have to seek FIPB approval for the deal if the FDI in the company goes over 49 per cent. The FIPB is likely to clear the proposal within 30 days, said finance ministry sources. Bharti has neither approached the finance ministry for dual listing till now nor the FIPB for approval.

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