|
|
South Africa: Maybe MTN Should Be Taking Over Bharti
 |
 |
|||||||||
|
||||||||||
|
|
|||||||||
|
||||||||||
Business Day (Johannesburg)
OPINION
7 May 2008
Posted to the web 7 May 2008
Johannesburg
DISCUSSIONS between Bharti Airtel and MTN are reported to centre on the purchase of 51% of the South African company by Bharti at an indicative price of about R165 a share.
MTN must think seriously about the bid, because the operational synergies are not overwhelming. There are suggestions combined buying might put the company in a better negotiating position with equipment providers. But by how much? What would that be worth to the combined group? This we need to know.
Additionally, although Bharti has a greater market cap, MTN's revenue and profit are higher . In a sense, it is the larger company. At the last reporting period MTN's full-year revenue was $9,6bn at current exchange rates, compared with Bharti's $6,7bn. MTN's ebita announced last December was $4,2bn. Bharti's recently announced ebita was $2,8bn.
The Financial Times reports Bharti has apparently raised about two-thirds of the approximate $20bn required to make the bid, if it comes to fusion, which is encouraging. But repaying these loans will put pressure on the company, and it would consequently be pressing MTN for dividends, which may curb MTN's own expansion plans.
|
If the companies do think there are operational synergies in a tie-up, what about doing it the other way around?
Shouldn't MTN, with its superior profitability, be bidding for Bharti? At least the financial stress on the entity would be located at the point of highest cash flow.
Overall, much depends on whether MTN's shareholders think the company's growth has started levelling off . If so, they should press for the highest price and sell. If not, they should decline the offer.
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
