NEW DELHI: Recessionary times hold little fear for visionaries. Especially if they happen to be leaders in the one industry where India is the world’s fastest growing market.

At a time when global giants are complaining about a cash crunch and putting ambitious plans on hold, Bharti Airtel has relaunched an audacious merger bid with South Africa’s MTN that could create a $61-billion transnational telecom goliath with combined revenues of $20 billion and over 200 million subscribers across Africa, Asia and Middle East.

The two firms Bharti Airtel and MTN on Monday revealed a potential transaction that involves a complex share swap deal. It could ultimately be worth $23 billion to $29 billion, and will be discussed exclusively between the Bharti Airtel and MTN till July 31.

The strategic objective is to achieve a full merger of MTN and Bharti Airtel. Broadly, Bharti Airtel will pay in cash and shares for 49% of MTN while MTN will pony up cash and stock for an effective 36% stake in Bharti Airtel. Bharti Airtel is offering 86 rand ($10.31) in cash and half a Bharti Airtel share for each MTN share. The offer values MTN at about 35% more than its closing price of about 120 rand on Friday, May 22. Sunil Bharti Mittal, CMD of Bharti, said, “We are delighted at the prospect of developing a partnership with MTN to create an emerging market telecom powerhouse. Both companies would stand to gain significant benefits, including reduced costs from enhanced scale”. MTN CEO Phuthuma Nhleko said, “We are excited at the prospect of teaming up with Bharti Airtel, India’s number one wireless operator and one of the most strongly capitalised players amongst its emerging market peer group. This would create a highly visible commercial partnership between South Africa and India.”

The deal would be the world’s biggest non-pharma transaction so far this year (Pfizer bought Wyeth for $64 billion and Merck acquired Schering-Plough for $46 billion). It would also be India’s largest cross-border deal, almost twice the size of Tata Steel’s near $13-billion acquisition of Corus in 2006.

“Bharti Airtel is in a far stronger position today than a year ago. It has strengthened its subscriber base, maintained Ebitda (earnings before interest, tax, depreciation and amortisation) margin and paid its first dividend. It is cash rich. Talks broke down last year over cash and ownership issues,” said Kunal Bajaj, MD of telecom consultant BDA India.

Talks collapsed in May 2008 when MTN proposed a new structure that would have seen Bharti Airtel become an MTN unit.

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