South African telecom company MTN is likely to open channels with Reliance Industries Ltd (RIL) before finalising a deal with Reliance Communications. MTN will hold talks with RIL to get a clear understanding of the existing agreement between the two Ambani brothers on their mutual right of first refusal, in any sale of majority stake in their respective companies.
Industry sources said any prospective deal between MTN and Rcomm is sure to be delayed if the former opens channels with RIL to understand the contours of the agreement.
Mukesh Ambani?s RIL had on Thursday, sent a letter to MTN saying it held the first right of refusal if Rcomm wanted to divest its majority share to any entity. This has been contested Anil Ambani?s by Rcomm, which is currently in negotiations with MTN to develop a consolidated footprint in the gloabl telecom market. Rcomm sources said according to a view expressed by government, based on an opinion by the Attorney General of India, and various Supreme Court decisions, any restrictions on the free transfer of shares in an Indian public limited company, even if written in the constitution of the company was illegal and unenforceable, as per Section 111A of the Companies Act, 1956. ?On that basis, RIL?s claim is meaningless?, said an Rcomm source. ?RIL?s position is weak, as its alleged right of first refusal is not even incorporated in RComm?s Articles of Association?.
Responding to this, RIL sources said despite the country?s largest private sector company officially writing to MTN and Rcomm, so far it has officially not received any response from either of them. When contacted, RIL officials said that so far MTN has not contacted them but it has ?in good faith notified both the Anil Dhirubhai Ambani Group and MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG?. RIL sources also said that the MoU is binding on both the parties and if Rcomm feels otherwise it should come out with the MoU in public.