South Africa says there is “devil in detail” on MTN/Bharti deal

South Africa’s Treasury said on Friday it was broadly supportive of a tie-up between mobile phone operator MTN and India’s Bharti Airtel but that the “devil is in the detail”.

Ministry of Finance spokeswoman Thoraya Pandy said in an emailed reply to questions that the government had met with MTN about merger talks it is holding with Bharti, but that the company had not yet sought formal exchange control approval from the country’s Reserve Bank.

“We’ve met with MTN to discuss what specific approvals are required. There may be a number of exchange control-related approvals that the deal would require. They have raised in broad outline their merger plans and what it would involve,” Pandy said.

“But is is important to state that they have not put in an application as yet. They are in all likelihood still working on the finer details,” she added.

Pandy said the government supported a tie-up in principal, but that final approval would depend on the structure of any deal.

“Broadly speaking, this transaction would be a mutually beneficial tie up between developing countries but of course, the devil is in the detail and until they apply, we can’t really comment,” she said.

The companies said in May they had revived merger talks and were considering a deal under which Bharti would pay cash and shares to end up with 49 percent of MTN, after MTN pays cash and stock for an effective 36 percent stake in the Indian firm.

The stake-swapping deal could eventually lead to a full merger, creating the world’s No. 3 mobile phone operator, the companies have said.

Four sources close to the deal told Reuters on Friday the companies would probably extend exclusive talks by at least two to three weeks beyond an initial deadline of July 31.

South Africa’s Reserve Bank will probably have to approve any deal. The Bank could not immediately comment on Friday and has previously declined to comment on the talks.

Source: Reuters