Bharti sweetens MTN offer as deadline nears

LONDON/SINGAPORE – Indian mobile operator Bharti Airtel’s move to sweeten a US$24 billion deal with South Africa’s MTN is a key step in reaching an agreement as a deadline nears, analysts and sources said on Friday.

Bharti has increased the cash component of its offer for a 49 percent stake in MTN to US$10 billion from a proposed US$7,6 billion, two people familiar with the matter said.On top of that, Bharti would pay US$4 billion in stock for a total package of US$14 billion, seven per cent more than the earlier US$13 billion proposed deal.’We believe a deal under the aforementioned terms would be positive for Bharti given only a marginal increase in overall payout,’ RBS analysts wrote in a research note.The deal is subject to an end-September deadline. The firms have extended talks twice.’Management of both companies has been working hard and I’m optimistic we’ll get an agreed offer to put to shareholders before the end of the month,’ according to one source, who could not be named as he was not authorised to speak publicly about the negotiations.’I don’t believe Bharti will have to sweeten its offer any further.’Reuters reported last month that Bharti might sweeten its offer for the MTN stake by 5-10 per cent, quoting a source familiar with the negotiations. Regulatory issues were the last hurdle to be crossed ahead of an announcement, one of the sources said, adding he did not see any major obstacles.Banking sources told Reuters that Bharti’s advisers, Standard Chartered and Barclays have yet to approach syndicate bankers for an increase in the loan size from an initial estimate of over US$4 billion.’The loan size is still the same, $4-$5 billion,’ one of the syndicate bankers told Reuters.Analysts said the key factor in the success of the deal would be the response of MTN shareholders. – Nampa-Reuters