Merger Saga Continues

11:50 AM -- The complex merger negotiations between Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and MTN Group Ltd. have taken another twist with the announcement that the two carriers are extending their exclusive discussions until the end of August. (See Bharti & MTN Extend Exclusive Talks ).

As the previous July 31 deadline passed without agreement being reached, speculation grew that the deal was going the same way as last year's discussions, and would be consigned to the list of "might have beens."

The extension gives new hope, with Bharti stating that the terms of the deal could still change, providing the first (albeit small) indication that Bharti may be prepared to offer improved terms.

The original proposal was that Bharti would acquire a 49 percent shareholding in MTN, while MTN and its shareholders would acquire a 36 percent share in Bharti. (See Bharti Airtel, MTN in Talks and Bharti, MTN in $23 Billion Talks.)

However, pressure has been rising on Bharti to sweeten the deal, either in the form of more shares or cash (or both), as MTN's shareholders look to maximize their position. Check out this Economic Times report for more details.

Bharti also has to consider the demands of Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), which currently holds a 30 percent stake in the Indian operator and is keen to maintain its share.

Should the deal finally go through, the combined assets of the two companies would provide a super-operator for high-growth markets. It would become the world's third largest in terms of subscribers, behind China Mobile Communications Corp. and Vodafone Group plc (NYSE: VOD), and offer significant growth potential. Bharti Airtel added 8.4 million connections in the second quarter of 2009 in Indian alone, and MTN added 6.7 million across its 21 markets, according to Wireless Intelligence .

— Catherine Haslam, Asia Editor, Light Reading

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