Bharti poised for MTN signal

Bharti Airtel, India 's leading mobile operator, said it could "move pretty quickly" if the board of MTN, the South Africa-based telecoms group, puts itself up for sale on Monday.

Sunil Bharti Mittal, chairman and managing director of Bharti Airtel, told the Financial Times that he had "been approached by bankers in the last few months in a much more frenzied manner" but had not formally discussed any bid for MTN with his own board.

"I'm always willing to listen to investment bankers,but the real point is whether there is actually a possibility to do this deal," he said. "We'll never know unless MTN itself were to come back to us. It's not come to the stage where I've taken it to my board."

Bankers revealed that Anil Ambani, chairman of Reliance Communications, held extensive talks with Phuthuma Nhleko, MTN chief executive, in the first quarter of 2007 and was poised to re-enter the fray.

The two Indian operators would be unlikely to have a clear run at MTN. Several leading global players, including China Mobile and Vodafone, have analysed how their businesses would combine with those of the Johannesburg-based group.

One telecom executive said: "Everybody has now talked to MTN and the company has been completely analysed to death but its board is still debating what to do. The strategy seems to work, I guess, because the share price keeps going up."

People close to the MTN board said it would not want to be seen selling 100 per cent of one of South Africa's flagship companies to foreign bidders, but would be open to other structures. The board, which meets on Monday, is chaired by Cyril Ramaphosa, a politician-turned-businessman.

Bankers said no transaction would be politically acceptable unless it involved an integrated management structure, with a dual headquarters and dual listing. Black empowerment groups would also need to keep equity stakes.

People close to the situation said in one possible structure, Bharti would make a partial tender offer for a 51 per cent stake in MTN. The South African group could then keep its listing on the Johannesburg Stock Exchange.

MTN has a market capitalisation of $35.6bn and little net debt.

Mr Mittal said Bharti would have no difficulty in raising funds if required. "Money's not an issue. Our net debt is just $70m," he said. "The whole world wants to fund us."

But bankers warned that financing the purchase of 100 per cent of MTN would be a "struggle" for the Indian operators in nervous capital markets. One suggested that Bharti might team up with a sovereign wealth fund if it decided to go ahead with an offer.

Investment banks are jockeying for position on a deal. Bank of America is advising Reliance; Merrill Lynch and Deutsche Bank are advising MTN; Standard Chartered is advising Bharti; and Singtel, which owns 30.5 per cent of Bharti, is being advised by Goldman Sachs.

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