Here's the remainder of the rejected capsules for this week. Look for more rejected capsules next Friday.
Emerging Market Telecoms
India's Bharti Airtel and South Africa's MTN have considered a merger. The structure is part of a proposal by Bharti to buy MTN in a cash and stock deal that would enable MTN's leading shareholders to take significant stakes in the merged entity.
The combined effort would rival that of American Movil, Latin America's leading mobile phone company. A Bharti-MTN group would certainly be a large competitive threat, although its operations would be smaller than the likes of China Mobile and Vodafone, the world's largest mobile groups based on revenue and market capitalization.
UPDATE: Since I originally started writing this story, Bharti Airtel has decided to call it quits. India's largest mobile operator broke off talks with South Africa's MTN earlier this week, shattering the idea of forming the world's largest emerging market telecom partnership.
Bharti points to irresolvable differences regarding the structure of the proposed deal, not funding, for the reason behind the severed talks. The merger would have created a global telecom behemoth, with more than 120 million customers in 22 countries across southern Asia, Africa and the Middle East. However, despite this failed merger, Bharti remains eager to expand internationally.
Fears of Economic Migration
South Africa will open borders and introduce visa-free travel in time for the 2010 World Cup. The move would see nationals from the 14 members of the Southern Africa Development Community--including Zimbabwe, Angola and the Democratic Republic of Congo as well as the relatively prosperous South Africa--allowed to move across the internal borders on a passport alone.
Although there's still friction regarding sensitive borders, signs are pointing to ultimate approval, according to the Regional Tourism Organization of South Africa. However, many are wary of such approval. They fear that lax migration controls will lead to an influx of economic migrants into South Africa, which is already experiencing horrific violence because of anti-foreigner sentiment and escalating economic tensions between native South Africans and immigrants.
GDP per person in South Africa is currently around $3,827 a year, compared to a measly $108 in the Congo. There are certainly risks involved in boosting immigration because the employment rate is already extremely low, standing at 23 percent. But South Africa's trade union federation views it differently and believes the plan would help spread economic benefits in the region. (In South Africa's current xenophobic environment, the implementation of such a plan will only cause further problems.)
Details of the plan must be worked out before the government's summit in August.
Shell's Potential Deal with Nigeria
Royal Dutch Shell is close to agreeing on a deal with Nigeria that would see the company provide loans to meet funding shortfalls that have cut production at one of its most important oil businesses. The plan is designed to inject cash into Shell's joint venture with the Nigerian government. The state's failure to pay its share of costs has stalled main projects. Attacks by militants have also contributed to a slump in Shell's production in the oil-rich swamps of the Niger Delta, which provided 18 percent of Shell's oil last year.
Tackling the financial gap with oil companies is President Umaru Yar'Adua's No. 1 priority, according to government officials. Soaring oil prices of late have driven negotiations by underlining the mounting cost to both sides of lost output. In the meantime, Shell is offering the government a package of loans to help fund close the funding gap.
UPDATE: Since I first started writing this capsule last week, Shell has agreed to lend the government $3.1 billion to help relaunch stalled projects in its Niger Delta joint venture, the Shell Petroleum Development Company. In fact, over the past two weeks, the Nigerian National Petroleum Corporation has borrowed quite a bit of money, $6.1 billion, from oil giants Exxon, Total and Shell. Most of the money is expected to provide joint ventures with cash infusions.
Meanwhile, the government hopes to find a longer-term solution to its funding gaps in its joint ventures, which account for the majority of Nigeria's 2.1 million-barrels-of-oil-a-day production.
