Reliance Communications, MTN talks called offJuly 19th, 2008 - 1:51 am ICT by IANS
New Delhi, July 19 (IANS) The globally-watched consolidation talks between Anil Ambani-led Reliance Communications, India’s second largest private telecom company, and South Africa’s MTN were called off late Friday. Citing “legal and regulatory issues”, the two companies said they have allowed their exclusive period of negotiations to lapse. The two groups intended to create one of the world’s top 10 mobile telecom firms with 116 million subscribers across India, Middle East and Africa.
“Owing to certain legal and regulatory issues, the parties are presently unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse,” a Reliance Communications statement said.
The two companies had entered into exclusive 45-day talks May 26, which was extended to July 21 a week ago.
The decision was taken after at least four letters to MTN from Mukesh Ambani-controlled Reliance Industries that said their group had the first right of refusing a stake in Anil Ambani’s Reliance Communications, should they be sold.
The billionaire Ambani brothers have been locked in a bitter battle ever since the group, created by their late father Dhirubhai Ambani, was split a couple of years ago.
While Anil has Reliance Communications among the companies under his fold, Mukesh controls Reliance Industries, India’s largest private company.
Reliance Industries had Thursday said it had commenced arbitration proceedings by nominating Justice B.P. Jeevan Reddy, a former judge of the Supreme Court, as an arbitrator for resolution of the dispute.
“Reliance Communications has refused to participate in the conciliation meetings under the alternate dispute resolution provisions contained in the non-competition agreement,” the company’s statement alleged.
The Anil Ambani group reacted saying the letter issued to the South African firm by Reliance Industries had established the rival’s mala fide intentions.
“RIL has issued [its] fourth letter today [Thursday] threatening legal action on MTN discussions,” the statement by Reliance Communications said, referring to the notice issued to MTN by the rival group led by Mukesh Ambani, the elder brother of Anil Ambani.
“RIL’s mala fide design to derail MTN discussions [is] clearly exposed. RIL has successfully destroyed India’s image in foreign eyes,” the statement said.
“RIL’s notice for arbitration proceedings [is] legally and factually unwarranted.”
The group had earlier approached market watchdog Securities and Exchange Board of India (SEBI) to probe the dip in the share price of Reliance Communications (R-Com).
It has also charged the Mukesh Ambani-led company with trying to impact Reliance Communications’ market valuation to derail the merger-acquisition talks with MTN.
Reliance Communications was looking at MTN’s 70 million customers in 21 countries, including South Africa, Nigeria, Iran and Cyprus and its attractive balance sheet that shows a net profit of $1.58 billion on revenues of $9.62 billion.
The Anil Ambani-led company also has in its fold 48 million customers, covering 15,000 towns and 400,000 villages in India on a network of 165,000 km of optic fibre cables.
The two groups entered into talks after discussions between Bharti Airtel, India’s largest private telecom company, and MTN to create the world’s sixth-largest mobile phone company was called off.
That deal was potentially said to be worth $45 billion.
Reliance Communications marked its entry into the international mobile phone market by buying out Uganda’s Anupam Global Soft to offer mobile, fixed-line, Internet, national and international long distance services there.
The group also made a commitment to invest $500 million there towards expansion.
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