MTN-Reliance exclusivity period may be extended

The 45-day exclusivity period for negotiations between Anil Ambani group company Reliance Communications anmd Africa's mobile firm MTN, which comenced on 26 May, expires on 8 July. It has been reported that Reliance Communications may get a 20-per fresh equity issue in MTN to avoid having to make an open offer.

Reliance Communications entered the fray for the African company after Bharti pulled out of negotiations for breaches in the deal terms.

The exclusivity period could be extended by another two or three weeks. MTN is expected to update its shareholders and make an announcement tomorrow, when the Johannesburg Stock Exchange opens.

Some reports have speculated that its shareholders are likely to reject changes to the mobile operator's deal with India's Reliance Communications, which under the new proposed structure, involves the creation of a special-purpose vehicle controlled by Reliance Communications along with with co- investment from private equity inverstors and Middle East sovereign wealth funds would own 51 per cent of MTN.

Initially, MTN was to have acquired Reliance Communications with Ambani swapping most of his 66-per cent stake in it for shares in MTN. However, subsequently elder brother, Mukesh Ambani's Reliance Industries's threatened to block the deal saying that it had the rights to first refusal over any stake change.

Reliance Communications is said to to be restructuring the deal to avoid any potential legal challenge.

MTN is wary of a potential legal challenge, which is why they could be looking at other structures, which could involve Reliance communications picking up a stake directly, even if it is a smaller stake of about 25 per cent or 30 per cent.