South Africa's government will closely scrutinize any merger agreed between MTN Group Ltd. and India's Bharti Airtel Ltd., throwing up a potential obstacle to a deal to create one of the world's largest cellphone operators as a deadline for talks draws near.
MTN is viewed locally as a national champion, having launched in 1994 as South Africa emerged from apartheid with the election of Nelson Mandela. It also is the last South African-owned cellphone company after the U.K.'s Vodafone Group PLC earlier this year bought control of Vodacom Group Ltd.
"The minister believes we need to keep the family silver at home," Tiyani Rikhotso, a spokesman for Communications Minister Siphiwe Nyanda, said Tuesday. "It's important MTN retains its character as a South African company."
Mr. Rikhotso said the department has no plans to "become a third party to discussions" between the Johannesburg-based company and Bharti, and that it would wait until the details of an agreement are disclosed before formulating a stance on a tie-up.
The National Treasury is considering an application from MTN on exchange control regulations, and spokeswoman Thoraya Pandy confirmed a transaction of the size proposed by the two companies would need to be taken to cabinet for approval.
"The South African government is working closely with the Indian government through their finance ministries," Ms. Pandy said. "It would be important that such mergers are not only of benefit to the two companies, but to both countries as well."
