If Bharti can pull off what would be India's biggest foreign takeover, it will be vaulted into the global major league and have a chance to exploit one of the last high-growth emerging markets, they say.<\/p>\n
"This would give the combined entity a footprint in one of the least penetrated mobile markets," said telecoms analyst Madhudusan Gupta at Gartner consultancy in Singapore.<\/p>\n
"I see it as potentially win-win for both companies," he said.<\/p>\n
The Asia-Pacific overall has a tele-density rate – the number of people owning a telephone out of every 100 people – of 34%. Africa's stands at 30% while India is at 26%.<\/p>\n
Shares of MTN, which has subscribers in over 20 countries, have surged to record highs since Bharti announced Monday it was in "exploratory talks" with the flagship South African cellular giant that could lead to a "transaction."<\/p>\n
A Bharti company spokesman declined to comment Wednesday on an Indian media report that Bharti founder-chairman Sunil Bharti Mittal had travelled to London to meet MTN's chief executive officer Phuthuma Nhelko.<\/p>\n
"It's important for Mr Mittal to explain the details of his bid and his future plans with the company," India's leading financial daily Economic Times quoted a source close to the discussions as saying.<\/p>\n
"We're still in the early days but yes contacts are still going on," a Bharti official, who did not wish to be identified, told AFP.<\/p>\n
A tie-up would create the world's sixth largest mobile company in subscriber terms after China Mobile, Vodafone, Telefonica, China Unicom and America Movil.<\/p>\n
Delhi-based Bharti, 30.5 percent owned by Singapore's SingTelNet, would double its subscriber base to around 130 million and gain an empire embracing the Indian subcontinent, all of Africa and West Asia.<\/p>\n
Bharti, which announced net profit for the year to March 2008 up 57% to 67.01 billion rupees (1.6 billion US), has 62 million subscribers while MTN has 68 million.<\/p>\n
Bharti has been going from strength to strength in India's mobile market, the world's fastest-growing, which added a record 10.16 million subscribers in March, taking the total to 261.1 million.<\/p>\n
"Branching out makes sense because Bharti is already the top Indian player – the Indian game is done in that sense. Now is the time to look at the global market," said an industry analyst close to Bharti who asked not to be named.<\/p>\n
Bharti would be able to use its links with Nokia Siemens and other global players to construct top-quality networks in the emerging markets, analysts say.<\/p>\n
"This entity would be in a region with maximum potential. Bharti brings to the table its proven low-cost model and also faces many of the problems of MTN, rolling out networks into rural areas and building infrastructure," said Gartner's Gupta.<\/p>\n
"There's probably no other operator in the world that can offer effectively what Bharti has to offer to MTN – the talks are probably beyond taking stake, it could be a common vision that these guys might be sharing," Gupta said.<\/p>\n
The bid talk comes on the heels of a series of high-profile takeovers of foreign companies by cash-flush corporate India.<\/p>\n
The potential deal would trump the country's largest overseas acquisition so far – Tata Steel's 13.7-billion-dollar takeover of Anglo-Dutch steelmaker Corus in 2007.<\/p>\n
Media reports have said MTN's board would be reluctant to sell off 100% of one of South Africa's top companies to a foreign buyer but could consider other ownership structures.<\/p>\n
Bharti is believed to be looking at buying 51% of MTN whose, market capitalisation now is around 40 billion dollars, and analysts say a full-blown offer would be hard for the Indian company even with its strong balance sheet.<\/p>\n
"You would be hard pressed to find something that will give you the same returns because MTN stands head and shoulders above everybody else," Irnest Kaplan, managing director of Kaplan Equity Analysts, told South Africa's Business Day.<\/p>\n
Bharti's share price has been falling on concerns the acquisition would place a burden on its balance sheet. However, Mittal said he would have no trouble raising funds for a bid, despite the global credit crunch, because of the firm's low debt.<\/p>\n
"History indicates markets worry about overpayment and dilution first before looking at synergies and extended growth opportunities," said Citigroup analyst Anand Ramachandran.<\/p>\n
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