India's Bharti Airtel said it has ended talks with South Africa's MTN after failing to reach deal on the structure of what would have been the world's sixth-largest mobile phone operator.
Bharti, India's leading mobile phone operator, and MTN announced they were in exploratory discussions on May 5 to create an emerging markets mobile phone giant with more than 130 million subscribers in around two dozen countries.
Media and analysts had speculated that Bharti, 30.5 per cent owned by Singapore Telecommunications, was eyeing a 51 per cent stake in MTN or would engineer a merger between the two companies in a deal that would value MTN at up to $50 billion (Dh183.5bn).
Emirates Telecommunications (Etisalat) has previously said it was evaluating a possible bid for MTN, and China Mobile, the world's biggest mobile carrier, had said it was interested in the South Africa market. Bharti said after an in-principle agreement had been reached, MTN had presented a new structure that it saw as a "convoluted way of getting an indirect control of the combined entity" and could not accept it.
"MTN's thinking about acquiring Bharti is obviously unacceptable," said Gajendra Nagpal, Chief Executive at Unicon Financial, a New Delhi-based investment advisory firm.
"The market is going to lift Bharti's shares on Monday as there were fears of equity dilution in the company or it being highly leveraged due to the deal," he said.
Shares in MTN ended at 155.65 rand on Friday, valuing it at around $38.5bn.
In a statement, Bharti said a price for MTN shares had been agreed and over a dozen international bankers from the United States and Europe had given "confident letters of funding of more than $60bn".
"Discussions were on until late night without a breakthrough. Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN," it said.
MTN finance director Rob Nisbet declined to comment.
MTN is sub-Saharan Africa's biggest mobile phone operator, and is present in some of the world's most lucrative markets, such as Nigeria, Cameroon, Ghana, Zambia and Uganda.
In South Africa's competitive market, MTN lags Vodacom, a venture of Telkom and Vodafone.