Reliable sources have revealed that the Bharti-MTN merger’s fate was sealed three weeks before it was called off on SEP 30, 2009.

It is learnt that the South African governments treasury wrote to MTN on September 11 demanding that the merged entity be domiciled in South Africa (a request earlier made in mid August as well) AND that it should be listed in both countries, OR the deal would not be blessed (South African government’s pension fund, Public Investment Corp, holds 21% stake in MTN).

Members of the South African treasury had visited India on September 24 to understand the regulatory and legal framework of Indian laws and deliberate upon hurdles to the deal. The Indian side revelaed that the dual listing structure would result in huge tax losses for India among other factors.

The South African treasury insisted on a parallel listing via the trust route. Such parallel listing would mean creating two trusts, both listed, one in India and one in South Africa. Both trusts would mirror a share swap deal. Such parallel listing would have been compliant with existing Indian laws.

It turns out that the deal fell through because of South Africa’s political compulsions!

P.S: The investment banks involved in the deal – Bank of America, Merrill Lynch and Deutsche Bank from MTNs side and  Standard Chartered & Barclays from Bharti’s side will not be making the potential 24 to 48 Million dollars had the deal gone through.