Bharti Airtel yesterday said that it is holding discussions with South African telecom company MTN Group that are aimed at “combining the strengths of the two leading emerging markets players and, accordingly, is veering towards possible structures to achieve this objective”, Business Standard reports.

The company also made it clear in a statement today that this may not require it to make any “bid” for MTN at all.

Bankers said the combine would create a large telecom behemoth with over 131 million subscribers spread in 23 countries closing in on the leading international telecom companies like Vodafone Plc, which have over 250 million subscribers across 25 markets, China Mobile with 392 million and America Movil (in Mexico) with over 159 million subscribers.

To get the low down on the technicalities of the deal, read the BS report.

The merger seemed like the most obvious option because of a lot of reasons. While a lot of the Indian Media has been beating drums about the deal they seem to forget that Bharati would be Marrying up if it buys MTN – for that it will have to pay a significant premium. MTN boasts more mobile subscribers (68m to Bharti’s 62m), a broader geographic reach (it has customers in 21 countries, including over 9m in Iran and almost 1.5m in Afghanistan) and higher profits: $4.5 billion in 2007, before interest, taxes and depreciation, compared with Bharti’s $2.8 billion in the year to March 2008. An acquisition seems like too expensive an option and thus the merger ensures that sanity prevails. A lot of factors however will need to be ironed out – the biggest being the amount of control that the Mittals can retain. 

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