New Delhi, June 03: A potential merger being
discussed by Indian telecom major Bharti Airtel and South Africa`s MTN could increase the net debt of the two firms by about USD 6.9 billion, global rating agency Fitch said on Wednesday.
"Under the current terms as presented to the market, it
could result in additional net debt of 4 billion dollars at
Bharti and 2.9 billion dollars at MTN," Fitch said in its
comments on the potential transaction, but noted that it would
wait for finalisation of the transaction before taking any
rating action on the two firms.
Fitch said that it would closely monitor developments and
was taking "note of the strategic merits of a potential
partnership between Bharti and MTN, as well as the positive
impact on their respective business risk profiles in terms of
diversification and enhanced scale."
"Nevertheless given the early stages of the discussions,
potential regulatory hurdles and other associated
uncertainties surrounding the transaction, Fitch will await
finalisation of the transaction structure before taking any
formal rating action," it added.
Bharti is one of India`s leading private sector
telecommunication operators with a pan-national cellular
footprint, while South-Africa`s MTN is one of the leading GSM
operators in Africa and the Middle East with a geographic
footprint across 21 countries.
Late last month, Bharti Airtel and MTN disclosed
commencement of exclusive discussions to potentially acquire
stakes in each other and eventually achieve a full merger.
If the discussions are successful, Bharti will own 49 per
cent in MTN, and the South African telecom firm and its
shareholders will own an effective 36 per cent economic
interest in Bharti.
This is the second attempt by the two companies for a
potential deal after their talks failed in May last year. At
that time, Bharti had said that it was pulling out of the
talks as MTN was proposing a deal that varied from their
earlier proposed structure.
Bharti had also disagreed to MTN`s proposal for making
the Indian company a subsidiary of the South African company
as part of the deal.
Bureau Report
