New Delhi, May 6: After both South Africa-based telecom giant MTN and Sunil Bharti Mittal-owned Bharti Airtel confirmed on Monday that they were engaged in talks on a possible buy-out of the former by the latter, analysts said that an acquisition of MTN would prove an ideal beginning to Bharti’s international ambitions. After its phenomenal success in the Indian market over the last 10 years, the country’s largest telecom service provider has developed aspirations to become a global player.

While MTN has a total subscriber base of 68 million, Bharti has about 64 million cuctomers. Therefore, if the deal goes through, the combined subscriber base of the merged entity would be 132 million. This would make Bharti the world’s fourth largest company after China Mobile, Vodafone (led by Indian-born Arun Sarin) and China Unicom. China Mobile and China Unicom are both government-controlled companies.

MTN operates services in several African countries, Iran, Afghanistan and Syria — all high potential markets. Some analysts have estimated that MTN has the potential to accumulate up to 240 million subscribers in these markets by 2012. India, on the other hand, is currently the fastest growing market in the world and adding about 8.5 million subscribers every month, with Bharti being the country’s market leader. In case it buys out MTN, it will acquire a presence in several new high growth markets.

The biggest challenge for Bharti, however, is to arrange funds for such a mega-deal. It will not be easy for the company to arrange resources to acquire a controlling stake in the South African company, which has a market capitalisation of $36 billion. Sources said that Bharti, which has a market capitalisation of $42 billion, may explore the possibility of roping in a partner for the acquisition. On Tuesday, MTN shareholders seemed to have made a killing even before any deal was finalised with Bharti Airtel, as the South African company’s share prices rose 10 per cent. The management and staff of the company hold about 13 per cent stake in MTN.

Bharti, however, denied reports that it had made any offer to MTN. “Bharti would like to clarify that it has not made any offer to acquire the whole or a part of MTN,” the company said in a statement issued today. “Therefore, the speculation in a section of the media about a bid by Bharti is incorrect and misleading.” MTN has been scouting for a buyer for the last one year. Vodafone, China Mobile and Mukesh Ambani-owned Reliance Communications, too, have shown interest.