Bharti calls off telecom deal with SA's MTN

Issue of dual listing results in its collapse


The deal collapsed primarily because of South African government’s insistence on dual listing, which is not permissible under India’s present laws governing the foreign exchange transaction.
 
Under the current Indian law dual listing can not be done until and unless the rupee is made fully convertible.  This is the second time in just over a year when Sunil Mittal-led Bharti Airtel has been forced to abandon talks for amalgamation of the two organisations in a complex deal that also required government’s clearance for dual listing.

“Bharti and MTN have decided to disengage from their discussions when the exclusivity period ends on September 30, 2009,” Bharti said in a statement issued here.
“The structure needed an approval from the government of South Africa, which has expressed its inability to accept it in the current form,” Bharti said in a statement while praising the support given to the proposed deal by Finance Minister Pranab Mukherjee and others.

The South African government has said it is unwilling to sacrifice the company’s “South African character” and had raised the idea of a dual listing as a compromise. The high-voltage proposed Airtel-MTN merger had drawn global attention with both the governments getting into the issue.

The proposed deal had run into hurdles with Finance Minister Pranab Mukherjee hinting that dual listing was linked to full convertibility of tupee and finance ministry was looking into legal issues of the deal.

Mukherjee said that the government would welcome the deal but it should be in the context of existing laws of the land.

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