University of Botswana Law Journal - PULP

160 UNIVERSITY OF BOTSWANA LAW JOURNAL DECEMBER 2010
which perhaps formed the basis of this deal’s failure was that these two
companies were seen in their home territories as prized possessions and their
respective governments were not willing to let them relinquish their national
identities. Keeping this basic premise in mind, this article tries to dwell deep
into the legal issues involved in this deal and how they were instrumental in the
failure of this deal.
The three primary legal issues involved in this deal were: (i) Dual
Listing of the combined entity (ii) FDI regime in India (iii) India’s Takeover
Code. All these issues are discussed in detail in Chapter 3 of this article. Since
the deal never actually materialized, the deal structure and the full monetary
aspects of the deal were never disclosed. Hence secondary sources of
information like leading newspapers, journals etc were utilized to base this
article.
The complex legal issues involved in this deal have been analyzed in
a simplified manner for the benefit of the general public and to allow for
everyone to appreciate the size and importance of the deal. The main aim of
this article is to allow for the general public to understand the legal issues
which didn’t allow the deal to go through.
PROLOGUE
Bharti Airtel Ltd is an India based multinational mobile telecommunications
company. It is the largest cellular service provider in India and makes up for
about 23 per cent of the India’s mobile market. 1 The telecom company is led
by India’s telecom czar, Mr. Sunil Mittal who effectively holds a controlling
stake in Bharti Airtel through Bharti Telecom. Bharti Airtel has been keen to
position itself as a transnational corporation with its non-India operations like
Airtel Lanka, Airtel Kenya etc.
The MTN Group is a South Africa based multinational mobile
telecommunications company, operating in many African and Middle Eastern
countries. It has presence in nearly 20 countries in Africa and Middle East.
Bharti Airtel and MTN conducted exclusive negotiations twice, 2 in
just one year to create a transnational alliance which in future could lead to a
full blown merger however both times the negotiations fell through. 3 The
talks attracted the attention of the Governments of both the countries who kept
a close eye on every move made by these two corporations. With all this
public, industry and media frenzy over a deal which could have easily
1 ‘Subscriber Figures for April 2010’, Cellular Operator Association of India, URL: http://coai.com/
Sub%20Figs/GSM%202010/all%20india%20GSM%20cell%20sub%20figures%20-%20Apr%27%2010.
xls (Last visited on 13 May, 2010).
2 The first round began on 5 May, 2008 and the second round on 25 May, 2009.
3 A. Sharma and E. Bellman, ‘Bharti, MTN Disconnect Deal Worth $24 Billion’, The Wall Street Journal,
URL: http://online.wsj.com/article/SB125431578653952371.html (Last visited on 20 April, 2010).