Bharti Airtel, India’s leading mobile service provider has made a 19 billion dollar bid to buy MTN, the major South African telecom player. MTN has a widespread market in Africa and parts of Middle East that would make it one of the biggest beasts of emerging markets telecoms.

Sources said Bharti tabled a bid for controlling stake stands at $21.8 a share, but MTN is looking for $23.8 a share. The remaining funding will be through the issue of equity to MTN shareholders, it added. Alpine Trust is the single largest shareholder with 23% stake. It is a consortium of MTN management and staff, and a private family. Merrill Lynch and Deutsche Bank are financial advisors to MTN, while the South Africa Government Pension Fund holds 13.5%.

Bharti Airtel had looked for an overseas acquisition for the past couple of years. Top officials even identified a couple of overseas companies, South Africa’s MTN and America’s Sprint Nextel. Last month, Bharti decided to zero in on the South African player after exploratory talks.

Bharti Airtel chairman, Sunil Mittal denied any formal bidding and said the media speculation around the bid is misleading. Though he gave a clear hint in saying the details will be released as and when agreement is reached.

Finally, Lakshmi Mittal announced his interest in taking over MTN. A day after his announcement, he went to London to meet MTN’s CEO Phuthuma Nhelko. Insiders said Bharti would retain MTN top management including its chairman after the acquisition.

MTN has also confirmed that it is in exploratory talks with Bharti Airtel. MTN operates in 21 countries, has a subscriber base of 68.2 million and market capitalization of $36 billion.

China Mobile and Orascom are the only competitors for Bharti. The two major telecom players in Indian soil, Reliance communications and Vodafone were staying out of the MTN acquisition race at press time.

The two investment banks have each pledged to underwrite $6 billion of the amount that Bharti will need to purchase the controlling stake, sources said. Bharti is expected to fund the balance with an issue of equity, either directly to MTN shareholders or to institutions.

Merrill Lynch and Deutsche Bank are advising MTN, while the advisor for Bharti is Standard Chartered. Singtel, which owns 30.5% of Bharti, is being advised by Goldman.

MTNs share price kept climbing. It has now reached an all-time high and 10% is above the normal price. Some analysts said the price could rise as much as 20-25% by the end of the week, which is a considerable amount.

On the other hand, Bharti’s share price went down dramatically yesterday on fears of overpayment and dilution, before looking at extended growth opportunities.

Vodafone has slashed its STD tariff rates to be a step ahead in this stiff competition. Other Indian telecom players are also likely to slash the tariff rates to compete with the big players like Bharti Airtel. X