New Delhi/Mumbai, May 24: Bharti Airtel today said it had ended talks with South Africa’s MTN Group after failing to reach an agreement on the structure of what would have been the world’s sixth-largest mobile operator.

On May 5, Bharti, India’s leading mobile operator, and MTN had announced they were in exploratory discussions to create an emerging markets mobile phone giant with over 130 million subscribers in around two dozen countries.

Negotiations were called off after MTN turned the takeover plan upside down — proposing to take over Bharti Airtel instead.

Bharti’s decision to pull out of the talks was prompted by the fact that the new structure proposed by the MTN board would have been detrimental to Airtel’s minority shareholders and its plans to become an Indian telecom multinational.

After bankers from both sides agreed in principle to a Bharti-controlled structure on May 16, the MTN board met this week and proposed a different transaction.

The new structure envisages Bharti Airtel becoming a subsidiary of MTN and the South African telecom company owning majority shares of Bharti Airtel in exchange for a controlling stake in MTN.

“This convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and would not capture the synergies of a combined entity,” Bharti said in a statement.

“More importantly,” Bharti said, “the company’s vision to transform itself from a homegrown Indian company to a true Indian multinational telecom giant, symbolising the pride of India, would have been severely compromised.” The situation was “completely unacceptable,” the company said.

MTN Group had no immediate comment.

Bharti said a price for MTN shares had been agreed and over a dozen international bankers from the United States and Europe had given “confident letters of funding of over $60 billion”.

“Discussions were on till late last night without a breakthrough. Accordingly, Bharti has decided to disengage from the ongoing talks and has conveyed the same to MTN,” Bharti said.

R-Com buzz

While merger talks between Bharti Airtel and MTN fell through, Reliance Communications (R-Com) is learnt to have expressed interest in the South African company.

It is learnt that R-Com has opened a channel of communication with MTN and may start talks over the next few weeks. R-Com is the second largest telecom player in India after Bharti with a market cap of $30 billion.

An R-Com spokesperson refused to comment.

With Bharti exiting, the valuations of MTN could possibly soften in the near term, which could be to R-Com’s advantage. However, considering the conditions that MTN set for Bharti, it remains to be seen how things shape up between R-Com and the African telecom giant.

MTN is expected to issue a statement on Monday on the termination of its talks with Bharti.