MTN and Reliance Communications on Monday said they were in exclusive talks aimed at a potential combination of their businesses, that could create a USD 66 billion telecoms giant. Under the deal MTN would become a holding company of India`s No 2 mobile operator, and Ambani would in return get around a third in the South African firm, and keep an indirect holding of nearly 20 percent in Reliance Communications. This may result in a transfer of Chairman Anil Ambani`s two-thirds stake in the Indian firm to MTN.
That would trigger an open offer from MTN for another 20 percent of Reliance Communications, as Indian law mandates such an offer to shareholders after an acquisition of more than 15 percent of a company.
The management structure at MTN and RCom will remain unchanged but the companies may opt for a common board of directors eventually. MTN is Africa’s biggest phone firm with networks in 21 countries spanning South Africa to Nigeria to Iran. It has more than 68 million customers to RCom’s 45 million in India. MTN is valued at some $38 billion by market capitalization against RCom’s $28 billion.
This will be the second attempt by Reliance to try and beef up through deals. The company lost out to Vodafone in an auction for Hutchison Essar Ltd, in part because its advisers didn’t anticipate India’s mobile phone market will continue to expand as rapidly as it has done and the company failed to raise its bid. Seems like it's trying to catch up this time
After Bharti fails, Reliance tries to merge with MTN
Bharti buying MTN to become fifth largest operator in world ?
Meanwhile, Bharti has roped in Singapore Telecom to be part of the discussions with MTN. SingTel holds about 30 per cent stake in Bharti Airtel and would have got involved in any case but sources said that the Singapore-based company may play a more active role. MTN’s market cap of $35 billion compares with $42 billion for Bharti. MTN’s 68 million wireless subscriber base also compares with Bharti’s 62 million.
If the deal goes through then Bharti and MTN would become the fifth largest mobile operator in the world with a significant presence in Africa, India and West Asia. It will also give Bharti a footprint in the African telecom market which has been dominated by local operators and European majors, including Vodafone Group and France Telecom.
One of the key issues for Bharti will be to raise funds for the acquisition. Reports suggest that the company is already in talks with a number of institutions including Standard Chartered, Deutsche Bank and J P Morgan. Bharti may have to cough up as much $20 billion for a 51 per cent stake.
Apple iPhone coming to India ?
But the agreement with Bharti is different than the agreement with Vodafone as Bharti has signed an ‘independent’ agreement that will allow it to sell iPhone handsets in India, the company said in a release. People will have to subscribe to a Vodafone connection if they want to use an iPhone in India.
Apple is abondaning it's exclusive locked deals selling style like with O2 in UK, T-Mobile in Germany, Orange in France and AT&T in US, as it faces low sales. Now it's started to sell iPhone unlocked and on rival networks in the same country as seen in Italy, Australia & now India.
The thing to watchout is weather Apple is brining it's new 3G iPhone or the old iPhone to India as by November the 3G iPhone will be out.
