Cookie 1 : Telecom companies' tie-up talks collapse

Cookie 1 : As per the recent news, India's largest cell-phone service provider Bharti Telecom and South Africa's largest telecommunications company MTN failed to reach an agreement that would have resulted in a tie-up and eventually a full-blown merger which would have resulted in around 200 million subscribers coming under the administration and service of a single-entity.

This was a $26 billion cash & stock deal with Bharti taking 49% stake in MTN and MTN getting a 36% economic interest in Bharti. The deal collapsed not because of the companies, which are private and are owned by private shareholders but because of the related Governments. The Govt of South Africa wanted a dual listing - to have MTN listed in Johannesburg even after this deal. But Indian laws prohibit its companies to get dual listed. And to get dual listed, the Indian currency(Rupee) has to be fully convertible. As of now, there is no provision for a capital account convertibility of the Rupee. Potential discrepancies on various other factors like information disclosure rules etc.. were also pointed out by the Indian Govt for not allowing the company to dual list.

BTW, its said, that if this deal had gone through this would have been the biggest FDI in South Africa. But the shareholders of both companies were happy for the collapse of this deal. From Bharti's stand point, the shareholders say that this would have moved away a lot of cash from the company and from MTN point of view, the shareholders say that Bharti's per share offer was very low than the actual market value.