MTN and Bharti decided to terminate merger talks, the national treasury said on Wednesday after talks between finance minister Pravin Gordhan, MTN chairman Cyril Ramaphosa and CEO Phuthuma Nhleko.
“MTN advised the minister that the two companies have mutually decided to terminate further discussions on the proposed merger, as they were not able to conclude all outstanding matters to enable the transaction to proceed,” the treasury said in a statement.
The treasury said the SA government was, in principle, supportive of local companies that wanted to grow and diversify offshore from a domestic base. “We particularly welcome such diversification to emerging and developing countries, as SA is committed to deeper South-South relationships,” it said.
The structuring of such partnerships was best left to the companies themselves, which had to make their decisions on commercial grounds. “However, when companies structure their relationships outside the current exchange control regulatory framework for such transactions, they require the approval of the minister of finance,” the treasury said.
“This was the case with the proposed MTN-Bharti merger, which required certain exchange control and other approvals.”
The treasury did not say whether these approvals would have been granted if the deal were to have proceeded.
The treasury said the finance ministries of SA and India were committed to closely working together to lay the basis for the development of mutually beneficial mechanisms for such mergers.
“In this regard, the national treasury has invited our Indian counterparts to SA to continue working towards a framework to support the growth and expansion of companies in both countries,” it said.
In a separate statement, Bharti said the SA government had “expressed its inability to accept it [the structure of the deal] in the current form”.
“In view of this, both companies have taken the decision to disengage from discussion,” it said.
It had enjoyed its engagement with MTN management and its board and it wished them continued success. “We hope the SA government will review its position in the future and allow both companies an opportunity to re-engage,” Bharti said. — Sapa