A deal that was never meant to be

Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

It was a marriage that would have pleased many, but the courtship period turned out to be too long and too demanding. So, there was no option left, but to scrap the thought! Though the two could-be-partners, Bharti Airtel and MTN, may have lost big time in terms of business opportunity, but in terms of share prices they have gained generously. On the day the exclusive talks were dissolved Bharti saw its share prices rise up to Rs.435 (4% increase) and the MTN shares rose up to 657 rand. Says a report by Ambit Securities, the rise has been because it finally did away with the uncertainty involved with the two companies. While the move does open a roadblock for Bharti, which is now looking for new partners; the same doesn’t hold true for MTN. It has been the third time, within a year that MTN has called off a deal. First it was Bharti; then it was Reliance Communications and then again Bharti. While some say that the fault lies with the companies, some say that it’s a shrewd step by the South African government (who passed on the buck to Indian government saying it didn’t agreed to the dual listing of the new entity). Whatever, the case may be, but calling off the deal certainly put a question mark on brand MTN as a reliable partner. And now that it’s looking for a new partner, companies will be skeptical in joining hands with it. Even if it does find itself a new partner there is no guarantee that the deal will fructify. Some people always remain single, they say!

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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