conflict management - mtn bharti airtel
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TRANSCRIPT
Apr 9, 2023 1
&
Deal OR No Deal
Phuthuma Nhleko
Apr 9, 2023 2
THE BHARTI-MTN SAGA
CHRONOLOGICAL
ORDER
2008
2009
5 May: MTN says it is in
talkswith Bharti
Airtel.
24 May: Bharti says it
hasended talks with MTN
afterfailing to agree on
which firmwill control a
combined entity.
25 May: Bharti and
MTNannounce revival of
merger talks to create a
telecom giant
29 May: many top
shareholders of MTN started supporting the
deal ($23 billion), but they were
looking for sum price
improvements
28 July: MTN's second largest
shareholder says the
company islikely to reach an agreement
3 Aug: Bharti and MTN
extendexclusive talks by a month.
Oct 1, 2009:The deal was
finally called off dual to
involvement of south African Government, issue of dual
listing and various policies related to FDI.
3 July: State Bank of India
offersa loan of up to $1 billion
to Bharti.
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IncompatibilityCONFLICT
•MTN is an MNC
1
•Core operations in 24 countries
2
•Presence in key markets such as Nigeria, Ghana, Cameroon, etc.
3
•Listed in South Africa on the (JSE)
4
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CONFLICT cont.
• Bharti looked to acquire 51% stake in MTN while MTN wanted Bharti to buy out the 100 % stake.
5
• India Denied for dual listing
6
• Finance ministry and RBI are divided on FDI norms.
7
• Culture Difference
8
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Perception & Awareness
PERCEIVED CONFLICT
•Finance ministry and RBI on FDI norms.
•Pressure form banks involved.
•Changes in takeover norms by SEBI.
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FELT CONFLICT
•South African regulators’ and unions’ concerns about foreign control of “national champions”.
•Cultural Differences
•Identity Problem – The South African government has made clear that it will not let go of the South African Identity of MTN
•Bharti’s concern of high risk and debt.
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Intentions
Competition Collaboration Compromising
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Behavior Dimension
Overt questioning or challenging of others
Minor disagreement or misunderstandings
Intensify negotiations
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Outcomes
DYSFUNCTIONAL OUTCOMES
Deal called off
Banks lose $50 mn fees as Bharti-MTN called off
The share price of Bharti , almost decreased by 8% after deal called off.
Bharti’s efforts of becoming an MNC failed.
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Conclusion
The deal appeared to offer growth as well as scale to both operators
MTN offered Bharti more growth options than the other way round
The convertibility of the rupee in India was the main obstacle
Indian government is not willing to change laws for a single company
Apr 9, 2023 11