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Bharti Airtel’s failed attempts to merge with MTN highlight the political and regulatory hurdles that plague international M&A deals

After almost two years, two attempts, half a dozen deadline extensions, regulatory reviews, political manoeuvring and secret negotiations, on 30 September 2009 India’s Bharti Airtel and South Africa’s MTN walked away from what would have been the largest global telecoms deal of the year.

The merger would have been worth around US$23 billion. Yet as the final deadline came and went, it wasn’t financial problems that poisoned the deal. Neither market forces nor corporate incompatibilities were to blame. Instead, the mega-merger was thwarted by regulatory roadblocks and political interference.

Building networks

India deregulated its telecommunications sector in 1999 and 25 operators appeared almost overnight. Many were ill-equipped to compete, and Sunil Bharti Mittal, the founder and chairman of Bharti Airtel, started buying them up as they faltered. By 2004 Bharti was a major player in India’s telecommunications market, although its presence was largely confined to the country’s major cities.

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