Check the numbers
Yet when the rumours are denied the price tends to drop. Why then is MTN’s share price staying up after both it and the rumoured acquirer, Bharti Airtel, denied talks were on the go? Actually “denial” is putting it mildly; the suggestion was virtually denounced by Bharti.
Perhaps the reason is the paper concerned is the august Financial Times, and that the story was reiterated. But really they could have checked the numbers a bit more.
Bharti’s higher market cap of $44bn is higher than MTN but not much higher. It s user base is larger — about 61-million, as against MTN’s 40-million. But it is a smaller company in many other ways, including average revenue per user.
What is more, Bharti’s ebida margin is almost twice that of MTN, making it unlikely MTN shareholders will accept Bharti’s paper. So cash is probably required and that means going to the reeling markets.
MTN is valued at $35bn which entails raising about $50bn, a bit more than chump change. In short, it would be a huge bite for Bharti. Anything could happen, but in this case don’t hold your breath.
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