MTN shareholder coronation says it wants 31% more for its stake

MTN Group Ltd. shareholder Coronation Fund Managers Ltd. wants about 31% more for its stake in Africa's biggest wireless provider from Bharti Airtel Ltd., which has proposed an estimated 23 billion merger.

Bharti, India's biggest wireless operator, on May 25 offered half a Bharti share and 86 rand (10.8) in cash for each MTN share to acquire 49% of the South African carrier. Talks were extended for a second time today to Sept. 30, after the first period of exclusive negotiations ended on July 31 and were extended on Aug. 3 to the end this month.

The offer “implies a 137 rand take-out price effectively for control,” Pallavi Ambekar, a telecommunication analyst at Coronation, which holds about 5% of MTN, said in an interview from Cape Town today. “We would feel more comfortable with at least another 40 rand on that, so say about 180 rand, and our preference would be for all cash.”

Shareholder objection may push back the creation of a mobile-phone operator with annual sales of 20 billion and 200 million wireless subscribers from Johannesburg to Mumbai that would challenge Vodafone Group Plc., the world's biggest mobile- phone company, in India and Africa. Bharti Chairman Sunil Mittal faces the task of winning over MTN's shareholders who say his company's offer falls short.

South African law restricts the level of institutions' holdings in companies registered outside the country. Singapore Telecom, Southeast Asia's largest phone carrier, owns about 30% of Bharti.

Bharti fell 1.3% to close at 400 rupees (8.2) in Mumbai trading, narrowing the stock's advance this year to 12%. The shares have underperformed the benchmark Sensitive Index's 56% rise. MTN declined 1.3% to 125.50 rand in Johannesburg trading, valuing the company at 29 billion.

Bharti and MTN plan to spend about 7 billion this year to extend their reach in markets from the Cape of Good Hope to the Himalayas covering territories that gave Vodafone almost 90% of its new users in the quarter ended March 31. Vodafone had more than 315 million users at the end of June.

Asked what Coronation did not like about the deal, Ambekar said: “The price for ceding control and the structure.”

MTN and Bharti need 75% of MTN shareholders to support the deal in order for it to proceed. MTN's largest shareholder the Public Investment Corporation, the government pension fund investor that holds about 11%, said it supports the deal in principle, but wanted more money.