A formal communication just in from Bharti Airtel, saying that they’re pulling out of the MTN talks:

“At the invitation of MTN board, Bharti entered into exploratory discussions on the possibility of combining the two ‘emerging market’ telecom giants.  A number of structures were discussed and evaluated
between the lead bankers on both sides. An in-principle agreement was reached on 16th May and a term sheet was initialled between the two lead bankers. This agreed term sheet was presented to the MTN Board on Wednesday, the 21st of May.

MTN has now presented a completely different structure, from what was agreed. This new structure envisages Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Bharti Airtel held by the Bharti family and Singtel, in exchange for a controlling stake in MTN.  Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity. Further and more importantly, Bharti’s vision of transforming itself from a home grown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised and this was completely unacceptable to Bharti.  Discussions were on till late last night without a breakthrough. Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN.

Throughout the process, the discussions amongst the bankers and the two companies were cordial and conducted in good faith. The reference price at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point.  This is in line with Bharti’s highly disciplined approach towards any acquisition and consistent with Bharti’s philosophy that it will not engage in a bidding war at any stage.  Bharti would also like to thank over a dozen Internationally reputed bankers from the US and Europe who have given confident letters of funding of over USD 60 billion.”