South African telecom giant MTN said on Saturday it was still pursuing tie-up talks with Reliance Communications after a dispute erupted over who has the first right to buy the Indian cellular operator.
The statement came after billionaire Mukesh Ambani, head of Reliance Industries, asserted late on Friday that he had the first right of refusal to purchase his estranged younger sibling Anil Ambani’s controlling stake in Reliance Communications.
”Nothing has changed. We are still having talks with Reliance Communications,” MTN spokesperson Nozipho January-Bardill said from Johannesburg, declining to comment further.
But the claim by Mukesh Ambani, India’s wealthiest man, could derail the $70-billion merger talks between Reliance Communications and MTN, Indian media quoted lawyers as saying.
The row signalled another low in relations between the battling brothers who had been joint owners of the sprawling Reliance empire before carving it up in 2005 after being unable to work together.
Reliance Communications, India’s second-largest mobile phone company, called RIL’s assertion ”legally and factually untenable”.
Reports have said the deal would involve a so-called ”reverse merger” under which Reliance Communications would become a subsidiary of MTN but with Anil as the largest single shareholder and likely chairperson of the merged entity.
Reliance Communications, which has 48-million subscribers, accused RIL in a statement of seeking to ”disrupt creation of one of the world’s most valuable communications companies”.
A source said this week the two sides were at an ”advanced stage” in efforts to create a global top-10 telecoms giant stretching from Asia to the Middle East and Africa with a 116-million subscriber base.
MTN, which has 68-million subscribers, is Africa’s largest cellular operator. The two sides entered discussions in late May to build an emerging market powerhouse after India’s top mobile phone company
Bharti Airtel hung up on talks with MTN in a dispute over control.
Reliance Communications said RIL’s claim was ”borne out of mounting despair and frustration” over the ”continuing success” of Anil Ambani’s group.
But RIL hit back, saying it had ”in good faith” notified both the Anil Ambani group and MTN of stipulations in a January 2006 agreement that it had the right of first refusal to buy the controlling stake in Reliance Communications.
However, Reliance Communications said the agreement had ”unilaterally” been signed by RIL when telecom company was under RIL’s control. It said a court ruled the agreement ”unfair and unjust” in October 2006.
Indian media reports quoted corporate lawyers as saying both brothers could have a strong case and the matter could end up in the courts.
The latest row stems from a mud-slinging feud that broke out between the brothers over control of the multi-billion-dollar Reliance corporate empire left to them by their rags-to-riches father Dhirubhai Ambani.
The bruising battle ended in three years ago after their mother Kokilaben brokered a deal. Under the deal, the brothers split up India’s largest private sector conglomerate.
Mukesh kept control of the oil, gas and petrochemicals businesses of the group flagship Reliance Industries. Anil got Reliance Energy, one
of India ‘s biggest power utility firms, the telephone company and Reliance Capital, the group’s finance arm.
Since the settlement there has been little warmth between the athletic Anil, known as the ”marathon man” for his liking for jogging and the more stolid, sober Mukesh.
Media reports have said the brothers have been competing to outdo each other since their father’s death and the last time they seemed truly united was at their father’s funeral pyre in 2002 where they
stood grieving side by side. – Sapa-AFP