Bharti-MTN largest global telecom deal this year

New Delhi, May 26 (PTI) The Sunil Mittal-controlled Bharti
Airtel and South Africa-based MTN group's proposed USD
23-billion mega deal is the largest global telecommunications
transaction and the fourth biggest global M&A deal this year.

The Bharti-MTN deal with a potential value of USD 23
billion is nearly half of the total telecommunication merger
and acquisition transactions announced till mid of this month.

As per global deal tracking firm Dealogic, global telecom
volumes in 2009 stood at USD 49.2 billion through 410 deals.

"Not only for sheer size, this deal would be a first of
its kind, because it is a stock and cash deal. It will bring
to centre stage the use of stock as a mechanism to settle
purchase consideration," global consultancy firm
PricewaterhouseCoopers Executive Director Sanjeev Krishnan
told PTI.

Besides, the Bharti-MTN deal would be the fourth-largest
deal so far this year after the Wyeth-Pfizer transaction
amounting to USD 61.8 billion, Schering-Plough and Merck deal
worth USD 45.9 billion and the US government hiking its stake
in Citi to 36 per cent for USD 25 billion.

Experts believe the Bharti-MTN deal certainly give a
fillip to the M&A market in India, which has been somewhat
dormant for a bit, but the lull in the merger and acquisition
space is far from over.

"Since this was a deal the two parties had negotiated
last year too, it is not a new transaction, so it may be
premature to say that the lull in the M&A market has lifted -
there are still financing and other challenges for most Indian
businesses...," Krishnan said.

The Bharti-MTN deal would involve a complex structure in
which both the entities would pay cash and stock for stakes in
each other. As per the exploring agreement, MTN would acquire
around 36 per cent economic interest in Bharti Airtel. While,
Bharti Airtel would acquire 49 per cent stake in MTN.

"This deal is unique as for the first time company stock
is being monetised in this manner to make an acquisition and
it may just spur alternative mechanism for financing
acquisitions in times to come," Krishnan added.

After the USD 23 billion Bharti-MTN deal, the Directv
Group's USD 14.7 billion acquisition of Liberty Entertainment
announced at the start of this month is the second largest
telecommunications deal so far this year.

Some other major global telecommunications deal include
US-based Frontier Communications' USD 8.6 billion acquisition
of Verizon Communications, Canada Pension Plan Investment
Board's USD 4.8 billion investment in Macquarie Communications
Infrastructure for 81.67 per cent stake in the company.

This would be the biggest M&A deal involving an Indian
entity. Prior to this, Tata Steel's takeover of European steel
major Corus for USD 12.2 billion was the largest, followed by
UK telecom giant Vodafone's controlling stake buy in mobile
service provider Hutch Essar for about USD 10 billion. PTI DRR
RKM