ON BOARD AIR INDIA ONE - The government may support the proposed $23-billion cash-cum-equity-swap deal between Bharti Airtel and South African telecom major MTN that seems to have run into turbulent weather after new norms on takeover announced by India’s capital markets watchdog.

A senior government functionary gave this indication Wednesday during an informal interaction with journalists accompanying Prime Minister Manmohan Singh while on way for the G20 Summit at Pittsburgh, US.

“Other governments do much more for their companies,” the official said on condition of anonymity, alluding to how concessions are extended in other countries when interests of the corporate sector are involved.

“We understand it is the question of supporting a private company.”

The official’s remarks assume added significance in the wake of Bharti and MTN approaching the extended deadline of Sep 30 to conclude their deal, which could result in a strategically aligned entity with over 200 million telephone subscribers.

Incidentally, Bharti group chairman Sunil Mittal had met Manmohan Singh in New Delhi Tuesday to ostensibly seek the government’s support for the swap deal even as a clarification by India’s capital markets watchdog was seen as putting a spanner in the spokes.

The Securities and Exchange Board of India (SEBI) had Tuesday said the need to make an open offer to existing shareholders would arise even if 15 percent or more equity of the target company was being acquired by floating a global depository receipts issue.

Earlier, it was understood that an open offer to existing shareholders was required only if the 15 percent or more of the ordinary shares - issued within the country - were being acquired by the potential strategic partner or the investor.

In the proposed deal, Bharti intends to hold 49 percent stake in MTN, while the South African telecom major proposes to acquire 36 percent stake in the Indian firm - 25 percent directly and the reminder from existing shareholders.

In a statement Tuesday, Bharti had already said it would seek an exemption from the takeover norm and that the deal will be compliant with all the norms that have been put in place in India and South Africa.

Bharti and MTN are also understood to be keen on dual listing of their company shares in both India and overseas, but some officials feel this can tantamount to full convertibility of the rupee through the back door.