Financing for the Bharti-MTN deal is progressing well

Leading Indian telecommunications services provider Bharti Airtel will raise around $5 billion of financing for its deal with MTN, according to sources close to the situation. Informal commitments for the loans required are already in place and a number of banks have expressed interest in participating in both the dollar- and rupee-denominated facilities.

The deal between Bharti and Johannesburg-based cellular network operator MTN envisages the South African firm and its shareholders taking a 36% stake in Bharti, while the Indian company will acquire a 49% stake in MTN. The $5 billion is intended to be split into two tranches -- a $3 billion to $3.5 billion five-year dollar financing and a $1.5 billion to $2 billion rupee financing.

Barclays Capital and Standard Chartered are joint M&A advisers and arrangers for the financing. Standard Chartered has been working with Bharti on this deal since it was on the drawing board and sources say the UK bank did in fact make the introduction between Bharti and MTN. Bharti told its shareholders it was exploring the possibility of a merger with MTN in early May 2008, but aborted the deal later the same month when it could not reach an agreement with MTN on how to structure the deal. MTN continued to be in play, however, as Reliance Communications, a rival Indian firm controlled by Anil Ambani, was also exploring a deal with the South African firm. But, in July last year, the Reliance deal too was abandoned.