Reliance Comm may opt for stake in MTN

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

A consortium controlled by Reliance Communications' Anil Ambani would take a 51 per cent stake in the South African mobile phone operator in order to avoid any legal disputes with his elder brother Mukesh Ambani, who runs Reliance Industries, the Financial Times said on Thursay, citing a person familiar with the deal.

A spokesman for Reliance Communications declined comment.

Reliance Communications, India's No. 2 mobile operator controlled by Anil Ambani, the estranged brother of Reliance Industries' chairman Mukesh, said in May it was in exploratory talks with MTN for a possible business combination.

The 45-day exclusivity period ends on July 8.

The Wall Street Journal said a deal could be announced this weekend, citing two people familiar with the situation.

Analysts and sources had suggested the outcome may be a share swap, with the Ambani group emerging the largest shareholder in MTN and Reliance Communications becoming a subsidiary of MTN.

A Middle East-based sovereign wealth fund could team up with Reliance Communications for buying the stake in MTN, it added.

Since a stake purchase of more than 35 per cent in a South African firm would require a tender offer, Reliance will buy a stake smaller than that and then seek MTN's shareholders' approval to waive their right to the offer, it said.

If MTN shareholders agreed to such a proposal, Reliance Communications will up its stake to 40 per cent; otherwise, it will hold just under 35 per cent, it said.