Anil ambani’s dream ends, talks with MTN called off

Anil Ambani’s Reliance Communications (Rcom) and South African telecom giant MTN on Friday announced they were calling off talks aimed at creating a $66 billion telecom group.

“The two sides were unable to conclude the transaction due to certain regulatory issues,” said a RCOM spokesperson in a statement.

MTN and Reliance Communications started exclusive talks on May 26 and the deadline was extended to July 21.

The extension, announced on July 10, came after a claim on shares in RCom by Mukesh Ambani, estranged brother of RCom chief Anil Ambani, and a sharp drop in share prices created obstacles to completing a deal by the original deadline of July 8.

A deal would have created a $66 billion emerging markets telecom group with operations in about two dozen countries and around 120 million subscribers. When the talks began, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has eroded valuations.

Mukesh’s Reliance Industries Ltd (RIL) last month wrote to MTN saying that it has right of first refusal over a sale of controlling stake in RCom. Effectively, what Mukesh’s group has said was that any sale of a controlling stake in Reliance Communications to anyone but Reliance Industries was illegal.

MTN in a statement to Johannesburg Stock Exchange said, “With regard to exclusive negotiations relating to a potential business combination between MTN and RCOM, owing to certain regulatory issues, the parties are unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse.”

RIL was not immediately available for comments.

THE BIG DEAL

A history of RCom, MTN talks.

  • May 13: Bharti says in exploratory talks with MTN
  • May 16: Bharti- MTN reach ‘in-principle’ agreement and a term sheet initiated between two lead bankers
  • May 21: MTN board meets to consider term sheet. MTN proposes alternate model where Bharti becomes its subsidiary
  • May 24: Bharti announces that talks with MTN have been called off
  • May 26: RCOM and MTN enter into 45-exclusivity perod for talks to combine both telcos
  • June 14: Mukesh Ambani’s Reliance Industries (RIL) entrs fray — claims the first right of refusal in case of sale or change of management of of RCOM
  • July 3: RIL calls RCOM for mutual conciliatory talks before initiating formal arbitration
  • July 7: RIL says no RCOM representative had turned up for a meeting with RIL
  • July 7: RCOM invies RIL to meet in the week beginning July 14 “to clarify any doubts” on the deal structure being discussed with MTN
  • July 8: 45-day exclusivity period ends
  • July 9: RCOM -MTN decide to extend exclusivity period till July 21
  • July 17: RIL starts arbitration proceedings against RCOM
  • July 18: RCOM and MTN allow exclusivity period to lapse; end talks

Courtesy :- IBN Live

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1 Comment »

  1. 1

    We are being touted as the emerging superpower of Asia on the basis of what ?? OH ok our economic power yeah??? But doesnt that sound like hoping for an ‘al dorado’…if a simple deal which could open up a new phase in Indian business could not be pulled through then what next?? In fact if RCom knew that the deal would face legal hurdles as it said in its joint statement then why did it have to politicise it ?? kindly visit the blog mentioned for your views…


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