India's Bharti Airtel and South Africa's MTN Group are expected to extend the deadline for their merger talks due to the complexity of the negotiations, sources have told the Wall Street Journal. The issue is reported to be down to issues with Singapore Telecom, which owns 30% of Bharti Airtel.
The companies are working with the original time frame in mind, but it is taking "a bit more time as the deal is complicated," said another person, who declined to be named.
The main stumbling point appears to be how to structure the deal so that SingTel can retain its 30% stake in the merged company. Singtel may receive global depositary receipts of Bharti Airtel or an additional stake in Bharti Telecom, an unlisted entity that holds a 45.3% in Bharti Airtel, said the unnamed source.
It is anticipated that if the discussions are successful, Bharti will own 49% in MTN, and MTN and its shareholders will own an effective 36% economic interest in Bharti. According to Fitch Ratings, under the current terms as presented to the market, it could result in additional net debt of US$4 billion at Bharti and US$2.9 billion at MTN.
None of the companies commented on the news story.
Talks last year broke down over the structure of the merged company, but resumed again a couple of months ago.