Randomly Noted

The protracted MTN-Bharti negotiations are over and done with. It’s a relief. On the surface, a tie-up between the big Indian and South African telecom firms made sense the way Daimler+Chrysler once did: Bring two mighty, complementary players together to create a ginormous entity with sparkling growth potential. MTN+Bharti would have instantly had 200 million subscribers and $20 billion in annual revenue with a vast span across continents and emerging markets. We all know how Daimler/Chrysler played out, leaving both firms in sorry shape, especially Chrysler. MTN-Bharti Airtel was heading in the same dubious direction, thanks largely to South African concerns about losing control of a national champion to a foreign buyer. As DJN colleague Robb Stewart recently wrote about the deal, which was scuttled Wednesday, “Cross-border telecommunications deals already have a poor history of success. Deals touted as mergers-of-equals tend to fare even worse.” You may recall that Daimler-Chrysler was also presented as a “merger of equals,” whereas reality soon proved otherwise. Ironically, over the years MTN itself benefited from the failure of a competitor to thrive amid convoluted ownership. As Robb wrote, “The companies may want to learn from Vodacom Group Ltd., a mobile venture that had been owned equally by South Africa’s Telkom SA ltd. and Vodafone Group PLC until the U.K. mobile giant bought control. Telkom managers have conceded that Vodacom was held back by its ownership structure and restrictions that prevented it from competing in marktes that were seen as belonging to Vodafone. The beneficiary of all this was MTN, which outgrew it.” Laissez-faire, anti-regulation types will wring their hands over the deal being effectively killed by politicians prioritizing South African corporate might over pan-markets industrial logic. I say: Don’t waste your time.