Analysts see Bharti-SingTel jointly going for MTN

JP Morgan conference call plays out strategy, pricing scenarios

NEW DELHI: The buzz that SingTel may be a joint bidder with Bharti for a majority stake in South Africa’s mobile operator MTN has grown stronger.

Andrienne Tho, SingTel spokesperson, declined, when asked to comment by DNA Money.

Analysts at a JP Morgan-organised conference call on the deal indicated a strong possibility of Bharti and SingTel jointly bidding.

SingTel, which holds 30.5% in Bharti, had earlier indicated that it won’t bid against Bharti.

One of the views that emerged from the call to discuss the implications of Bharti’s reported bid for MTN, hosted by Tim Storey of JP Morgan, was that Bharti may bid for anything between 35% and 51% in MTN, depending on whether SingTel is co-bidding or not.

One of the possibilities discussed was that Bharti may bid for 35%, while SingTel may go for 15 to 16%. The total cannot be anything less than 50%, analysts said.

While Bharti is believed to have offered to pay 165 rands per share of MTN, the asking price could go up to 180 rand per share, it is believed. At the current market price, MTN is valued at over 150 rand per share.
 
Telecom firms other than Bharti who could possibly participate in the MTN bid, according to analysts participating in the JP Morgan conference call, were Vodafone, Saudi Telecom, Orascom, France Telecom, with varying degrees of probability.

A Russian paper has even named Altimo as a possibility.

The main positive about MTN is its exposure in the emerging markets - 21 of them - and that its mobile penetration could double in five years.

The key risks are political instability in South Africa, regulatory issues and the fact that there is a currency exposure to 21 markets.

Analysts said Bharti is unlikely to face much of an issue on the shareholders’ front, if it was to bid for MTN.
Interestingly, they pointed out that at MTN there has seen a mindset change at the executive level and the company is “willing to consider the offer on the table.”

This is a departure from MTN’s position till a year ago.

All this while Bharti Airtel and MTN leadership have been locked in talks for the past few days in London and Johannesburg.