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| Bharti may have to seek FIPB approval: FinMin sources |
| Pres Trust of India / New Delhi Sep 23, 2009, 17:27 IST |
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 With only seven days now left for Bharti's exclusive talks with South African MTN to come to an end, the finance ministry today said the domestic firm may have to seek approval from Foreign Investment Promotion Board (FIPB) for the deal as the transaction involves swapping of shares.
According to finance ministry officials, Bharti which is in exclusive talks with MTN till September 31, will also have to seek the approval from the FIPB if the FDI limit (direct or indirect) crosses the 49 per cent limit.
For the telecom sector, the FDI ceiling is 74 per cent. However, all proposals wherein the FDI is above 49 per cent have to come via FIPB.
If it comes to FIPB, then it (FIPB) will take a call on it within 30 days, they said but added that the companies are yet to approach the finance ministry for approval.
As on June 30, 2009, the total foreign shareholding in Bharti Airtel is a little over 42 per cent.
"The proposed deal has not come to either the capital markets division of the finance ministry for dual listing or in the FIPB so far," they said.
According to original terms of the transaction, Bharti will acquire 49 per cent in MTN and the South African firm will acquire 36 per cent economic interest in Bharti.
Reports say Bharti has sweetened its offer for the 49 per cent stake in MTN by $900 million $14 billion in cash and stock, and has agreed to retain MTN's senior management for at least two years.
The two companies have been in exclusive talks since May and have twice extended the exclusivity period, which expires at the end of September.
Yesterday, the Securities and Exchange Board of India said existing rules on triggering an open offer will now apply to entities acquiring Global Depositary Receipts or American Depositary Receipts with voting rights in an Indian company.
This means that purchasing such GDRs or ADRs of a listed Indian firm representing 15 per cent or more of the company's shares will trigger a mandatory open offer for another 20 per cent stake.
This may pose serious problems for the Bharti-MTN transaction. SingTel is one of Bharti's major shareholders with a current stake of around 30 per cent.
Bharti Chairman Sunil Mittal met Prime Minister Manmohan Singh Tuesday, ahead of Singh's anticipated meeting with South African President Jacob Zuma on the sidelines of the G-20 summit in the US on Thursday and Friday.
South African Treasury spokeswoman Thoraya Pandy had told PTI earlier that officials from the country's Treasury and central bank are in India to discuss regulatory matters related to the proposed tie-up.
The delegation will meet Thursday with officials from the finance ministry, Reserve Bank of India and Sebi.
A combined Bharti-MTN would have more than 200 million users and $20 billion in revenue, creating one of the largest telecom companies in the world.
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