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Reliance says 45-day talks with MTN exclusive
Reliance Communications, India's No 2 mobile operator, has started exclusive talks with South Africa's MTN Group that could create a $63 billion telecoms giant.
- Reuters
- Published: 00:06 May 27, 2008
Mumbai: Reliance Communications, India's No 2 mobile operator, has started exclusive talks with South Africa's MTN Group that could create a $63 billion telecoms giant.
Reliance Communications was quick to fill a void left after its bigger domestic rival, Bharti Airtel, pulled out of talks at the weekend aimed at taking control of MTN, sub-Saharan Africa's biggest mobile operator.
A source said Reliance would not be looking for the same kind of structure in the deal.
"Reliance Communications and MTN Group have agreed to enter into exclusive negotiations with respect to a potential combination of their businesses," Reliance said in a statement, adding there would be a 45-day exclusivity period for talks, during which neither party can talk to any other entity.
Reliance chairman Anil Ambani said a deal with MTN could "provide investors, customers and the people of both companies a global platform for exponential growth".
MTN had 68.2 million subscribers as of March, compared with Reliance's 48 million.
"Reliance Communications is smaller than MTN, and lacks the financial muscle for a takeover, but it is not going to want to be a subsidiary, either," said Ravi Dodhia, a telecoms analyst at KR Choksey Securities.
He said the two firms were instead likely to create a new company, with MTN taking a 51 per cent stake.
Bharti said on Saturday it called off talks after MTN proposed a new structure which it said would have seen the Indian firm becoming a unit of MTN.
Harit Shah at Angel Broking said Reliance and MTN might swap shares, as the foreign holding in Reliance was considerably lower than in Bharti Airtel, a factor that was seen as a possible roadblock for Bharti's attempted deal.
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