Johannesburg: Parting of ways by Indian cellular major Bharti Airtel and South African mobile giant MTN on Tuesday after 18-month long merger talks has elicited mixed feelings among investment advisors here.
While, the announcement that the telcos had mutually agreed to end discussions on a possible merger that would have created the world`s third largest mobile company did not surprise Investec Asset Management advisor Chris Stewart, who predicted it a week ago.
Vestec MD Paul Therombie, a strong supporter of the deal,
expressed disappointment that discussions had ended.
"I think we`ve been vindicated seven days further on,"
Stewart said in a discussion on the issue here on radio.
"We were always sceptical of the deal taking place," he
said, adding "getting the regulatory approvals and getting the
deal structure right was only the first hurdle. The other
would have been convincing MTN shareholders that the price was
appropriate and that hurdle had not even been approached yet".
Stewart said in a deal of this nature, there was always
a desire to compensate South African shareholders with scrip
which tended to be listed offshore.
Unless one can arrange some sort of dual listing
programme, than those shares typically count for an
individual`s offshore allowance and given exchange control
regulations it`s quite difficult sometimes for South African
shareholders to accept those terms, said Stewart.
"This was a great deal for (MTN) to get into a higher
growth area like India. Looking at the statements from the
South African Treasury, MTN and Bharti, it seems that everyone
is going nudge-nudge; wink-wink and blaming each other. But I
guess at the end of the day there were just too many hurdles
Chiluba Mumbi of BM Inc said: "There will be some downward
pressure on the (MTN share) price. In the previous round (of
discussion with Bharti) the price went to around R160 per
share. The highest we`ve reached so far is R128 and we think
it s been underpinned by this bid fever."
An application by MTN to the Johannesburg Securities
Exchange to suspend trading in its shares just 20 minutes
before it put out a short statement which said Bharti and MTN
had agreed mutually not to proceed with the transaction also