So much for emerging-market solidarity.

A proposed $24 billion deal between Bharti of India and MTN of South Africa has fallen apart, not for the usual issues of price or control, but national ego.

The apparent sticking point was that South Africa was eager to retain MTN's national character and had approached Indian authorities to consider a dual-listed entity, a structure that Indian laws currently do not allow.

The opportunity for a landmark deal in southern economic cooperation, one that would have created the third-largest wireless operator in the world, looks lost. After several failed attempts, it is the credibility of their respective governments, not the companies themselves, that is left in doubt.

The message from the South African government is that international buyers can invest in, but not control, the country's companies. UK mining conglomerate Xtrata has been a two-time loser there, having abandoned a takeover plan for Lonmin Plc, then met with roadblocks in its offer to buy Anglo American.

India has been more than willing to help its biggest companies push onto the multinational stage in cars, steel and technology. But international companies looking to buy into India have received rough treatment as well.
  
Every country seems quite happy to have their companies do the buying, but no one wants to see its national heroes sold.

Western countries have used a mix of justifications, from competition to national security, to torpedo attempts by China to buy such prized assets as Rio Tinto or Unocal. The French went as far as to declare yogurt-maker Danone a strategic asset to block a takeover by PepsiCo of the United States.

Beyond the mutual recriminations between Bharti and MTN and their respective governments, the question now is what happens next. The two companies left open the possibility they might find a way to resume a deal. But recent history is not promising.

Bharti and MTN revived talks four months ago, a year after previous negotiations broke down over which executive team would control a merged mobile phone giant with more than 200 million customers across India, Africa and the Middle East.

Bharti could accomplish some of what it is after by stepping into the bidding for rival African and Middle East player Zain of Kuwait. But this has its own political and financial hurdles.

MTN's options look less promising. A foreign buyer seems like wishful thinking now. The No. 2 South African mobile phone company may have to content itself with the rapid growth taking place in its African and Middle East markets. The South African government is happy to allow it to diversify offshore.

But the road to south-south economic cooperation has been shown to be rockier than the tentative Bharti-MTN deal had promised.

You can read some of Eric's recent columns here.

(Photo credits: Reuters/Mike Hutchings, Reuters/Ajay Verma and Reuters/Mike Segar)

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own -- 

By Eric Auchard 

LONDON, Sept 4 (Reuters) - Deja vu, all over and over again. The news is that T-Mobile UK is for sale. Still. 

The Financial Times, citing unnamed sources, says Deutsche Telekom is in "preliminary stage" talks with Vodafone, France Telecom, and Telefonica to sell T-Mobile UK. 

The logic of such a deal seems to be compelling. DT needs to sell out because T-Mobile lacks the scale to gain an edge over its multiple competitors. 

A combination would create substantial value, both for the buyer, and in terms of raising prices in what is one of Europe's most competitive mobile markets. Sanford Bernstein estimates that it could create up to 6 billion euros of value for Vodafone and Telefonica's O2, and up to 5 billion for FT's Orange mobile unit. 

But there's a rub. Although the deal creates a lot of value for the winner, it's also worth a lot just being a free-rider and benefiting from improved industry pricing that flows from consolidation. So the marginal advantage of winning shrinks. Unlike a conventional bid battle, where rivals try to thwart the other guy from stealing the prize, everyone is saying  "after you, Didier" or "No please Julio, after you. I insist." 

Everyone may want the deal to happen without them. 

For FT, Sanford estimates that the deal is worth about 2 billion euros in value creation, but 1.9 billion if it loses. Logically then, it should only be willing to pay an incremental 100 million euros to the estimated 3 billion standalone value of T-Mob, or 3.1 billion euros in all. At the high end, 02 could pay the most at around 3.9 billion euros, Bernstein calculates. That's shy of Telekom's 4 billion euro target.

What's changed since May, when reports first surfaced that Deutsche Telekom was looking for a buyer? Not a lot, in terms of the complexities of making a deal work with any of the three big rivals. 

But a source close to Deutsche Telekom said on Friday that the parent company put out calls to attract interest months ago and that the level of talks hasn't progressed very far since then. 

T-Mobile's own customers represent 15 percent of the UK market. Virgin Mobile, which relies on T-Mobile networks, pushes its total share of the market over 20 percent. But it is by no means clear the government is prepared to see a dominant player emerge in the UK. Regulator Ofcom said in July it sees the competitive landscape of the market as "healthy." 

The context in which merger talks are happening is that Telekom is conducting a strategic review of whether to keep or sell T-Mobile UK. What the 4 billion euro asking price may represent is the benchmark at which T-Mobile decides it might as well push ahead on its own. Or just wishful thinking. 

There's another scenario to consider. The problem with any big-deal scenario is that scale alone won't improve business conditions in the UK market. There is a spoiler involved in any polite effort to consolidate the mobile market -- Hutchison's 3, the fifth-ranked player in the market. Its pricing strategy has forced the other players to slash their own prices and until something changes with 3, conditions won't improve. 

Instead of being sold, T-Mobile UK, acting as a buyer of 3,  would be a more effective way of curing what ails the UK mobile industry. This deal would be less risky than overpaying or staring down the regulatory gamble another big buyer would be taking.

-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.—

You can find some of Eric’s previous columns here.

(Photo: Reuters/Stefan Wermuth)

In a wide-ranging interview with Charlie Rose earlier this week, Verizon CEO Ivan Seidenberg danced around questions about cellphones but was more forthcoming about the U.S. telecom giant’s long-term expansion ambitions.

Asked to confirm a report that Verizon will sell an Android-based phone from Motorola this year Seidenberg said, “It might be true what you said. I can’t quite disclose…”

And as for any plans to sell iPhone, the executive said that would be Apple’s decision.

Seidenberg was more comfortable talking about his dreams of global expansion and seemed to hint that the company would aim for an overseas acquisition in wireless.

“We want at some point a global retail play in wireless,” said the executive, whose wireless unit is 45 percent owned by U.K. based international service provider Vodafone. Verizon has long said that it would like to buy out Vodafone’s stake in Verizon Wireless, a move that Soleil analyst Michael Nelson said would likely be its first acquisition priority.

Instead of asking how Verizon might expand overseas, Rose questioned the executive about whether he would consider buying Sprint. But Seidenberg said Verizon is already big enough in the United States.

“Sprint is U.S based and we’re thinking global. I don’t know that that would make a lot of sense. We’re thinking differently, and bigger,” he said, suggesting that the “home run” would be to have global communications companies with the same kind of scale as companies like Fedex.

However this dream will likely take time and Seidenberg noted that the bulk of his company’s growth should come from internal projects. Around half to two thirds of growth will come organically with only about a third coming from acquisitions, he said. The executive noted that Verizon had grown from a small New York utility to become a major U.S. company. “In the next 10 years we may figure out how to go past that,” he said.

(Reuters photo of Ivan Seidenberg in July 2008)

The “Business Call to Action,” hosted by the British prime minister, drew some 80 CEOs of the world’s biggest companies including Microsoft, Coca-Cola and Vodafone as well as top politicians to discuss how big business can stamp out global poverty.

The lure? Big profits. Ghana’s President John Kufuor said it will be easier for U.S. and European businesses to make their next million in Africa rather than anywhere else. The credit crunch has made a few more believe this might be true.

“Three billion of the world’s 6 billion people have mobile phones,” Vodafone CEO Arun Sarin said. “And three-quarters of the new customers are in the developing world. This is a huge opportunity.”

Two companies laid out how they were using technology to tackle issues unique to developing nations in a race to win market share. British telecom company Vodafone has made some headway, while Telefonica O2 is launching new products to allow migrant workers to send money home using their mobiles.

Vodafone CEO Sarin:

• Vodafone already has 2 million Kenyan and Tanzanian customers, out of 10 million in total, signed up to M-PESA, which allows customers to send much-needed money to loved ones using their mobile phones.
• The company operates in Afghanistan. To get around the problem of illiteracy, the firm has developed voice recognition software. Luckily you don’t have to shout out your bank details or the amount you’re sending - you give voice instructions and plug in the numbers.

O2 CEO Matthew Key:

• Telefonica has plans to for a similar service in Latin America, where many leave for the United States and send part of their wages home.
• Telefonica wants 200 million people to sign up for “a new suite of banking products,” Key said.
• The company estimates there are 650 million money transfers back to Latin America each year, and its mobile phone products will slash the average $10 cost per transfer.

–Reporting by Chris Wills in London