Once again, Bharti Airtel Ltd and MTN have failed to pull off plans to create the third largest mobile services company. On Wednesday, after the markets closed in India but not in South Africa, Bharti announced that the proposed $23 billion transaction had been abandoned. In this instance, the stumbling block was the South African government, which, through a wholly owned investment corporation, is the biggest shareholder in MTN, with a 21 per cent stake. But walking through the issues of the case, it is clear that there are lessons here about the interface of politics and business.

The crux of the issue was the Jacob Zuma government’s reluctance to cede control of MTN for reasons of very populist politics. MTN has been branded as a symbol of South African pride, a manifestation, as it were, of the rainbow nation built post-apartheid. Zuma’s politics is much more stridently nationalist than his predecessor, Thabo Mbeki’s, and so ceding control of MTN to a “foreign” entity became politically contentious — never mind that the merger made sound business sense, with a potential to net 200 million subscribers in 24 countries. Telecom is a sector where consolidation of a subscriber base is vital, and now, with the abandonment of merger plans, it will be interesting to see how Bharti goes about surveying its options in other emerging markets.

The development, however, shines the light on how governments perceive their role in matters of business. Do they see themselves as guardians of the “national” character of businesses? Or do they instead play an enabling role in allowing these businesses to reposition themselves in ways that benefit their balance sheets, and serve the local economies by creating value and jobs? New Delhi in this case played an enabling role, with Finance Minister Pranab Mukherjee assuring South Africa that India would, at a later point, look favourably at the issue of full capital account convertibility, and thereby address the possibility of dual-listing of MTN post-merger. In the telecom sector globally, the merger could have been a game changer. But as a country that also has seen business impacted adversely on account of political concerns, will India mine the Bharti-MTN episode for ways to nuance its own interface with business and industry?