Will RCom-MTN deal be resurrected

Written by Agencies | London | Updated: Jun 1 2010, 02:17am hrs
With the Ambani brothers deciding to smoke the peace pipe, speculation is rife on whether the deal between Anil Ambanis Reliance Communications and South African telecom major MTN would be resurrected.

Earlier this month, the Mukesh Ambani-led Reliance Industries and Anil Ambani Group had agreed to dump their differences and scrap all non-compete agreements, saying this would eliminate any room for further disputes between them.

In a report headlined Ambani brothers truce fuels talks of fresh attempt at Reliance-MTN deal, a Financial Times today wondered whether prospect of an RCom-MTN deal be resurrected Reportedly, the proposed deal in 2008 with MTN had failed after RIL challenged RComs right to offload a controlling stake to the South African entity, claiming the right of first refusal granted by the family pact that divided businesses between the brothers.

Quoting a person familiar with that deal, Financial Times report said, last time, the deal fell through because of the right of first refusal...whether MTN wants a deal and Reliance wants to do a deal is a separate issue but at least that hurdle is not there any longer.

According to the report, some believe a deal could be revived. MTN is expected to hold a board meeting as early as tomorrow in which it would discuss a proposal to buy assets in Algeria and elsewhere in Africa worth USD 10 billion from Egypts Orascom.

With that deal running into trouble amid objections from Algeria, there is speculation that the MTN board will also review its India strategy at the meeting, the report noted.

On May 24, a day after the Ambani siblings announced that they decided to scrap non-compete agreements, MTN shares had surged as much as 6 per cent.

In July 2008, Anil Ambani-led Reliance Communications (RCom) called off talks for a potential transaction with MTN, citing legal and regulatory issues. At that time, Anil was engaged in a bitter battle with elder sibling Mukesh.