Bharti Airtel goes shopping in Africa

In what could be India's biggest acquisition, Bharti Airtel said it is in "exploratory" talks to acquire South Africa-based MTN. Media reports said Bharti Airtel had bid for a 51% stake in Africa's biggest telecom firm, valuing it at US$38bn. But, Bharti Airtel denied that it had made any offer for acquiring a majority stake in MTN. FT quoted unidentified sources as saying that Bharti Airtel had bid 165 rand per share and had secured US$12bn from Goldman Sachs and Standard Chartered Bank to finance the deal. It added that MTN was hoping for a higher bid of near 180 rand. Separately, Dow Jones Newswires reported that Bharti Airtel is considering a bid of 175 rand a share. Shares of MTN surged to a new record, while that of Bharti Airtel slumped amid concerns that the mega deal could strain the company's finances.

There was talk that other suitors could emerge for MTN, but China Telecom and Orascom said they were not in the race for acquiring MTN. Bharti Airtel's local rivals Vodafone and Reliance Communications too denied interest in the South African company. Reports also suggested that Singapore Telecommunications, which has a substantial stake in Bharti Airtel, could help it fund the MTN acquisition. However, there was no confirmation of this from SingTel. The Mumbai analyst community had mixed view of Sunil Mittal's proposed big bang acquisition. But, credit ratings agency Fitch said that Bharti Airtel's ratings could be under pressure if it ends up successfully acquiring a major stake in MTN, goes for debt financing. Bharti Airtel may have its debt rating reviewed for a possible cut if it nears a bid for the company, Standard & Poor's said.