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| Mittal, Phuthuma apprise FM of Bharti-MTN deal structure |
| Press Trust of India / New Delhi Aug 25, 2009, 17:46 IST |
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Indicating a smooth negotiation process between them, Bharti Airtel and South African MTN are understood to have apprised the Finance Ministry of their proposed deal structure.
Bharti Chairman Sunil Mittal and MTN Group President and CEO Phuthuma Nhlek had met Finance Minister Pranab Mukherjee yesterday.
The two telecom majors extended the deadline for exclusive talks for their proposed $23-billion deal to the end of next month recently.
Bharti and MTN, the largest telcos in India and Africa respectively, have been engaged in exclusive talks since June 24 to create the world's third-largest communications firm.
The deal present a complex structure in which both firms would pay cash and equity for stakes in each other as per which Bharti Airtel will get 49 per cent in MTN and the South African telco and its shareholders will get 36 per cent economic interest in Bharti.
Although no official comment was available on the agenda of the meeting, sources said may have centred on accommodating more FDI within the 74 per cent FDI cap as per the new norms.
The new FDI norms consider a company Indian if Indian promoters hold a majority stake in it and the investments made by foreign companies in any joint venture or downstream venture will be treated as Indian.
Bharti Airtel, which had close to 72 per cent foreign equity as per the old guidelines, has only about 43 per cent FDI under the new norms as SingTel's 31 per cent holding in the company as well as Vodafone's four per cent stake are routed through majority-owned Indian companies.
Bharti is learnt to have told the Minister that even after the deal, the emerging entity will, therefore, have FDI within the prescribed limit.
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