While reports claim that the first round of talks between Bharti and South Africa based MTN have eneded in a somewhat positive nod, there is regulatory hurdle which the two entities are likely to face in India.

As Bharti and MTN are working towards a merged entity, the new entity may face the 74 percent FDI limit applicable in India. Thus the companies will have to work towards a relevant and valid financial merger for India.

To meet this criteria, one obvious avenue for Bharti is to acquire the SA firm in totality. But in the present circumstances this looks a bit difficult. MTN management is demanding around $175 rand per share taking the valuation of the company close to $50 billion. Bharti on the other hand is ready to offer $45 billion. Also Bharti is offering half of the value in cash and the other half in stock transfer. 

Reports also quote that the firms face regulatory hurdles in South Africa as well since according to broad-based black economic empowerment (B-BBEE) norms, % of merged entity''s shareholding should be with black investors.