Falling shares, Ambani feud could scuttle MTN deal

Font Size

Print

Feedback

Email

Discuss

Related Articles

BSNL, MTNL to hire 700 management traineesBSNL, MTNL to hire 700 management traineesMarket should have determined 2G license fee: TRAIBharti Teletech bags Rs 350 mn contract from BSNL

Mumbai, July 3: : mergers and acquisitions announced in the first half of 2008 fell by 36 per cent compared with the same period last year, Thomson Reuters data showed, because of volatile markets.

OTHER SUITORS

Newspapers reported on Thursday that Reliance Communications along with investors, including Middle East sovereign wealth funds, may buy a majority stake in MTN rather than merge operations as planned earlier.

A spokesman for Reliance Communications declined comment.

Reliance Communications may also consider a revenue-sharing agreement, said Kevin Trindade, analyst at KR Choksey Securities.

"They will have to restructure the deal. The legal challenge from Reliance Industries can open a whole can of worms and a lengthy legal battle can drag the shares lower," he said.

A potential combination of MTN and Reliance Communications will have operations in about two dozen countries.

Reliance Communications, which has snapped up a series of smaller overseas assets recently, will not be content simply with growth in the Indian market, which Gartner consultancy forecast would expand cellular services revenue at 18 per cent annually and add subscribers at 21 per cent a year till 2012.

It is keen on Africa: it recently bought a telecoms firm in Uganda, and was one of four bidders last year for a controlling stake in Telkom Kenya, which went to France Telecom.

This time around though, it cannot hope to fend off other suitors for MTN, Obiodu said.

"MTN has signalled it's on the market and other bidders may only be waiting for the exclusivity period to end before they throw their hat into the ring," he said.

"Vodafone, France Telecom, Deutsche Telekom and China Mobile are all interested in the Middle East and African markets," he said.

An investment banker who is not directly involved in the deal also said MTN "would not play the waiting game" with Reliance.

"Anil is a tenacious guy and will fight, but he has nothing to offer as bait to keep MTN interested for long," he said.

The deadline to the talks comes two days after the death anniversary of Dhirubhai Ambani, founder of Reliance Industries, and still a strong influence on the squabbling Ambani brothers.

Anil, who chose his father's birth anniversary in December 2006 to announce his interest in Hutchison's controlling stake in the Indian mobile venture with Essar, may well pick the 6th.