Still talking, Anil Ambani group keeps MTN engaged

IN THE WORKS: Anil Ambani's Reliance Communications wants a stake in MTN.

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Keywords: Reliance Communications, MTN

New Delhi: The Reliance Communications-MTN deal is not off—at least for now.

The Anil Ambani-owned Reliance Communications and South African telecom major MTN on Wednesday announced a two-week extension of the exclusivity period for talks, but with a caveat that there is no certainty of a deal.

This comes after 45 days of talks and an acrimonious intervention by Mukesh Ambani-owned Reliance Industries Ltd. RIL said that they have a right of first refusal on the sale of Reliance Communications.

The deal entailed Anil Ambani selling majority of his stake in Reliance Communications in turn for an indirect control on the merged entity. Reliance Communication would have then become a subsidiary of MTN.

Before that could happen, the Mukesh Ambani group stepped in saying MTN can't buy Reliance Communications because it had the right of first refusal according to the peace agreement signed in 2006.

Anil Ambani group has been saying that this claim is false and legally untenable, but if international media reports are to be believed MTN is wary of getting into legal tangles.

And so the two-week extension will give the Anil Ambani Group more time to initiate some kind of informal dialogue with the Mukesh Ambani Group. Both sides have issued statements suggesting that they want to talk but the atmosphere currently looks too hostile for a settlement. A two week extension also gives Reliance Communications and MTN time to explore alternate deal structures.

Sources say Reliance Communications is open to picking up a direct stake in MTN, but MTN may not be game as it had earlier rejected a similar proposal from Sunil Mittal's Bharti Airtel.