Tuesday, May 26, 2009

Bharti Airtel renew acquisition talks with MTN Group of South Africa

On May 25, 2009, Bharti Airtel, the largest cell-phone operator in India in terms of subscriber, renewed acquisition talks with the South Africa based multinational mobile phone operator, MTN Group. Bharti Airtel is looking forward to acquire 49% stake in the company that has operations in various countries across Africa and Middle East. On the negative side, this is a “higher country risk,” it could prove fruitful for Bharti Airtel in the long run. On the positive side, this would expand Bharti Airtel’s business and increase its size and subscriber base. Competition has increased in the Indian telecom sector over the last decade. In addition, Bharti Airtel, would be able to benefit from MTN Group’s operating experience in the 3G mobile network field and “number portability,” which allows the mobile phone user to retain his original mobile phone number but change operators.

After the news came out, share prices of MTN Group and Bharti Airtel observed a loss of 5% in the share market. On May 26, 2009, shares of Bharti Airtel observed its second consecutive drop in share prices. At BSE Bharti Airtel share settled at Rs.770.40. Shares of MTN on the other hand were traded at 125.20 rand at the Johannesburg Stock Exchange following a 9% increase on May 25, 2009.

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The Economic Times