The Hindu Business Line : RCom continues talks with MTN despite RIL objection

Mumbai, June 16 Anil Ambani-led Reliance Communications said it was continuing its exclusive talks with South African telecom major MTN, unperturbed by what it described as efforts of the estranged brother Mukesh Ambani’s Reliance Industries to block the deal.

Reliance Communications had entered into exclusive negotiations with the MTN group in the last week of May for a period of 45 days for a potential combination of their businesses that would make the combined entity among the top 10 global telecom majors.

Last week, RIL put a spanner in the works, sending a letter to both RCom and MTN, claiming that it had the right of first refusal in respect of transfer of shares of RCom by the ADAG group. RIL based its claim on an agreement of January 12, 2006.

Given the huge valuation of MTN (roughly $ 40 billion market value), any merger deal with it would involve a share swap on a large scale, said analysts. Had MTN been an outright acquisition by RCom, this situation would not have arisen, even if RIL did turn out to have the right of first refusal.

RIL said it had, “in good faith” notified both ADAG and MTN of the stipulations in the agreement. Sources close to RIL said there was no response yet to the notifications.

Sources close to RCom, said RIL’s reference to the agreement was “misleading”, as RCom had written to RIL on the same day (Jan 12, ’06), rejecting the “unilateral procedure adopted for finalising such an agreement.” RCom further claimed that the Bombay High Court also upheld this stand through a judgment delivered on October 15, 2006.

An RCom statement on the issue did not mince words: “RIL is seeking to disrupt the creation of one of the world’s most valuable telecom combinations. RIL’s actions are clearly anti-consumer, anti-investor and anti-globalisation.”