Bharti-MTN deal unlikely to close by week-end: Srcs

By Shereen Bhan and Sandeep Gurumurthi, CNBC-TV18

India's biggest cross border M&A deal could take a while to be ironed out. CNBC-TV18 has learnt that contrary to speculation, talks between Bharti Airtel and MTN are unlikely to close by the end of this week.  It will be a complicated deal and one that has no timeline said a company source.

Raising debt is not Sunil Mittal’s big worry. Sources rubbish claims that suggest American bankers are reluctant to offer debt as MTN operates in politically sensitive countries like Iran and Sudan. A top source said, “We have huge commitments from US banks."

Moreover, sources added, if investing in MTN was all that sensitive would JP Morgan Chase put money into Africa's largest telco? JP Morgan currently holds 6% in MTN while another American institutional investor, Capital Research, holds a little under 4%.

While Bharti’s pedigree may guarantee loans, maintaining a prudent mix of equity and debt to fund the deal is a challenge. Moreover, structuring the deal, in order to comply with regulations in India and South Africa may also need more time and so the deal may not be finalised as early as this weekend. Sources stated, “Bankers are on it, it is a work in progress. We can't say when the deal will be struck. These type of deals can never have a timeline or certainty."

While sources are tightlipped on the structure of the deal, rumour mills are abuzz with a range of possibilities including an SPV, where Bharti alone or with Singtel picks up a 51% stake to start with. But in the near future, what seems most likely is an MoU between Bharti and MTN indicating the nature of engagement and perhaps a glimpse into the structure of the deal, if any.

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