Bharti Airtel has sweetened bid for MTN

Looks like Indian telecom major Bharti Airtel has sweetened its bid for the South African based MTN as the two companies appear to have reached a US$ 24 bn prelimanry accord to buy each other's shares, which is the first step in a planned merger. Interestingly, Bharti's founder Sunil Mittal has denied that such a pact has been reached and has reiterated that talks between the two are still going on. Already the deadline has been extended twice since July 31 and what seems to have stalled the process are some administration issues and trying to work towards an arrangement which is acceptable to all parties concerned. Should this cross-border deal finally go through, it will create a mobile-phone carrier with annual sales of US$ 20 bn and 200 m wireless subscribers. In our view, while there will be short term pressures, the long term advantages of entering a wider market and gaining synergy benefits are expected to be meaningful for Bharti, especially when growth in the Indian market slows down.