Family feud drags Reliance Communications shares downJune 17th, 2008 - 7:55 am ICT by IANS
Mumbai, June 16 (IANS) The feud in the Ambani family over elder brother Mukesh’s right to acquire majority equity in Reliance Communications, which is in amalgamation talks with South African telecom giant MTN, dragged the company’s shares down by 1.52 percent in Indian bourses Monday. The shares of the company opened slightly higher at Rs.545, against the previous close at Rs.543.35 and moved higher to the day’s high of Rs.549.70. The scrip finally settled lower at Rs.531.00 with a loss of 1.52 percent.
It was the first day of trading in Reliance Communications stock after the feud between the two groups came out in the open late Friday.
The 52-week high for the scrip was Rs.844 on Jan 10.
Mukesh Ambani-led Reliance Industries claimed last week that, based on a family pact two years ago, it has the first right to refuse majority stake in Reliance Communications, should they be put up for sale.
But Reliance Communications, which is a part of his younger brother’s Reliance Anil Dhirubhai Ambani Group (RADAG), refuted the claim.
The matter came up after Reliance Communications and MTN started their talks for a possible consolidation of operations, and Reliance Industries Ltd (RIL) shot a letter to the South African company making its claim.
But Reliance Communications, which has also threatened legal action against the Mukesh Ambani-led group, refuted the claim and said the family pact was not binding since officials of Reliance Industries alone signed it.
The two groups were carved out after a split in the business empire created by the late Dhirubhai Ambani and both his sons, now estranged, are part of the elite Forbes rich list.
“RIL is evading the issue that the alleged agreement, dated Jan 12, 2006, was illegally signed only by RIL’s own officials when Reliance Communications was still under Mukesh Ambani’s control,” said a statement by the Anil Ambani group late Sunday.
“RIL is also evading the issue that ADA group had rejected the alleged agreement on Jan 12 2006 itself, because of the illegal procedures followed by RIL,” the statement added.
MTN had said Saturday that its consolidation talks with Reliance Communications were still on, barely hours after the Anil Ambani-led group charged the Mukesh Ambani group with trying to derail the discussions.
Reliance Communications has been attracted by MTN’s 70 million customers in 21 countries, including South Africa, Nigeria, Iran and Cyprus and its impressive balance sheet, showing a net profit of $1.58 billion on revenues of $9.62 billion.
And for the South African company, a consolidation will result in access to 48 million customers of Reliance Communications, covering 15,000 towns and 400,000 villages in India on a network of 165,000 km of optic fibre cables.
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