New Delhi, Sep 30 (IANS) India's telecom major Bharti Airtel and South Africa's MTN Wednesday terminated their talks for a proposed $24-billion cash-cum-equity deal that could have created the world's third largest mobile phone entity.
According to Bharti, the proposed deal - which even had the backing of Prime Miniter Manmohan Singh - was called off after the South African authorities declined to accept certain regulatory constraints on the part of both sides.
"This structure needed an approval from the government of South Africa that has expressed its inability to accept it in the current form," said a statement by Bharti Airtel.
"In view of this, both companies have taken the decision to disengage from discussion," said the statement issued after the closing of stock markets in both India and South Africa.
"The alliance planned between Bharti and MTN was a vision based on solid fundamentals, which had the potential of creating an emerging markets telecom giant and the third largest telecom company in the world."
The main hurdle to the deal was the dual listing of the post-alliance entity, which the South African authorities were pushing for, but was not permitted by the present Indian regulations.
The deal, worth some $24 billion in cash and equity, had called for Bharti to get 49 percent stake in MTN, while the South African company and its shareholders to get 36 percent equity in the Indian telecom major.
The South African government was pushing for a dual listing since it would have allowed MTN to retain its national character. But the Indian authorities said that would be tantamount to convertibility of the rupee.
"We cannot merge two companies and still keep their identities apart," India's Corporate Affairs Minister Salman Khurshid told reporters here earlier in the day, in what was a clear indication that the talks cannot proceed any further.
Had the deal gone through, the combined Bharti-MTN entity would have been the third largest mobile phone company in the world, just behind China Mobile and Vodafone Group, with a subscription base of 207 million.
The Indian company, nevertheless, said it has not given up on its global ambitions.
"Bharti will continue to explore international expansion opportunities that are consistent with its vision and bring value to its shareholders," the company said.
The two companies had begun a second round of fresh talks May 25 after they had called off negotiations last year. This time around, the Indian government had also openly lent its support to the proposal at the highest level.
"I did mention this to President (Jacob) Zuma. I sincerely hope the deal goes through," Manmohan Singh had said at a press conference on the margins of the G20 Summit in Pittsburgh last week after his meeting with the South African leadership.
"I hope Indian companies will not be subjected to any discriminatory treatment," the Indian prime minister said in reference to the regulatory roadblocks, both in India and South Africa, which had emerged in way of the deal.