Proposed deal with Bharti fits into emerging mkt strategy: MTN

MUMBAI: MTN Group CEO Phuthuma Nhleko has termed as "transformational" the potential transaction with Bharti Airtel to create the world���s third largest telecom company. While both sides have not yet taken any "decision", the deal is in line with MTN���s vision, Mr Nhleko said after announcing his company���s results. MTN���s first half net profit rose 22%.

South Africa���s MTN and Bharti have extended till September 30 talks to create a telecom giant with over 208 million subscribers and revenues of over $20 billion. The $23 billion share swap-cum-cash deal is expected to be announced next month.

The transaction will provide diversification as well as scale and synergy benefits for MTN, Mr Nhleko said in a presentation post results. Offering rationale for the deal with Bharti, India���s largest operator in terms of revenues as well as subscribers, he said it will help MTN maintain growth profile and boost "South-South cooperation".

"MTN will continue to be listed on the Johannesburg Stock Exchange," he said, adding that the transaction will "create value for MTN shareholders".

In a separate statement, MTN said: "No decision or agreement to acquire any shares or Global Depository Receipts or implement the potential transaction ... has yet been made by the boards of either MTN or Bharti."
The deal envisages Bharti Airtel getting a 49% stake in MTN while the South African operator and its shareholders will get a 36% economic interest in Bharti. The complex deal will see Bharti consolidating its ownership in MTN while MTN will equity account its ownership in Bharti.

On May 25, Bharti and MTN resumed talks that had been halted last year after Reliance Communications started negotiations with the South African company. Bharti and MTN, later, extended the August 31 deadline to September-end.

MTN said its profit increased to 7.63 billion rand ($971.1 million) for the six months ended June 2009. Its subscriber base was up 14% to 103.2 million at June-end.