SingTel, Bharti to form new unit for MTN buy - paper

MUMBAI (Reuters) - India's Bharti Airtel and partner Singapore Telecommunications (SingTel) plan to set up a separate company for the acquisition of South Africa's MTN Group, the Business Standard paper said on Tuesday, citing unnamed sources.

The special purpose vehicle (SPV) will raise funds, including bridge loans, and may later sell American Depositary Receipts or Global Depositary Receipts to repay the debt, it said, citing sources close to the deal.

The SPV would be a subsidiary of unlisted Bharti Telecom, it said, which owns about 45 percent in Bharti Airtel.

MTN would not be offered a stake directly in Bharti Airtel, the paper said, as that may push foreign ownership in the Indian firm beyond the limit of 74 percent permitted by Indian law.

"The move to float an SPV will help Bharti Airtel to continue being listed on Indian stock exchanges, while MTN's (major shareholders) will be given a stake in the SPV," the paper said.

Bharti, India's top mobile telecoms operator, could raise funds by diluting the equity of the SPV, or the stakes of Bharti founders or SingTel, which has more than 30 percent, it said.

Media and analysts estimate Bharti may value MTN as high as $50 billion. Merging the two firms would create the world's sixth-largest mobile operator, with more than 130 million subscribers in around two dozen countries.

A spokesman for Bharti declined comment.

Bharti said last week talks with MTN were preliminary and that no bid has been made.